GE Ep 58: How StumbleUpon CEO Mark Bartels Makes Calculated Bets That Has Catapulted It To Over 35 Million Users With Mark Bartels

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Mark Bartels - StumbleUponToday we’re speaking with StumbleUpon CEO, Mark Bartels. Mark was born in South Africa and worked as an accountant before moving to the Bay Area. After working in mergers and acquisitions with companies like Deloitte & Touche, he joined StumbleUpon in 2008. While working as their CFO, StumbleUpon spun themselves off from eBay before taking the reigns as CEO.

Keypoint Takeaways: 35 million registered users

On the consumer side of the business, StumbleUpon is still a “click and get” recommendations provider. Mark describes that one-click discovery of sequential recommendations that keep people coming back. But on the business side, they hold the rank as number 5 for distribution of social media traffic to websites. They also earn advertising dollars by allowing paid distribution as well.

Today StumbleUpon has about 35 million registered users with the majority of activity on mobile. Mark says StumbleUpon is perfectly suited for the transition to smartphones and tablets ad StumbleUpon really started off as a MarsBaR extension. When StumbleUpon was heavily promoted, people would download the MarsBaR, and StumbleUpon would then be packaged as part of that. As a result, the company saw tremendous growth.

Shifting to mobile

The Internet saw a shift to downloadable extensions and then into mobile. Mark says StumbleUpon was actually a little slow getting into mobile because publishers and content providers were still trying to adapt. That meant pages were slow to render and load and it wasn’t an ideal user experience. As content creators have caught up, the user experience has naturally improved.

Mark explains that mobile has also changed the search game. “In the past, when web was king, you would type in a search query, Google would take you to that particular page. Now with mobile, that whole ecosystem is being fragmented and publishers are now looking for other ways for platforms to drive traffic to their mobile applications and that’s again where StumbleUpon is coming in, that’s exactly what we do. I find that, yes, that’s where the users are going but I found that the greatest content now is also starting to move to mobile so that suits us.”

 Fueling growth

App stores have been growth funnels for StumbleUpon, as well as social sharing. Mark describes it was a “dark social network” to describe the difference between logging in to Facebook and Twitter to share internally. Instead, they download the StumbleUpon extension to share. The company has found once you’ve downloaded the app and had your first session and connected with people, the probability of you coming back is high.

Going from the finance world to social sharing technology

I was curious how Mark transitioned from the finance world into a social sharing technology space. He attributes the move to staying curious. For Mark, that meant being passionate about the social and consumer space. There were only 16 people when Mark started at StumbleUpon, which meant he touched every facet of the business. “My advice to people who want to transition out of a specific label or a specific role is if you join a small startup you will see everything. You will understand “what does growth mean”, “what does engagement mean”, “what are the product managers doing”, “why are we hiring engineers”, “what is a product marketing division do” and all those things are things you learn when you’re in a small company.”

I liken the startup experience like going o college where you dip your hand into different things to figure out wha tyou want to do long term. Mark agreed and recommended a read by Mark Suster from Both sides of the Table called “Should I Learn Or Earn?” Mark advises that sometimes you need to step back in your career in order to learn.

Despite hailing the benefits of working at a start-up, Mark says there’s an advantage to working at a big company like Google or Microsoft when you’re getting started to find some mentorship and learn how the business works. “You’ve got to be careful that you don’t miss a step sometimes and find yourself as a startup veteran but lacking in some startup skills.”

Amassing the right team

Mark was fortunate to find solid mentors at StumbleUpon when he started who still help guide him today. He says it’s important to find people who have been there and done it. Look at the type of people you’re going to work for and what kind of mentors are available when picking a company.

Mark points out many people don’t do enough due diligence to research the company they’re joining. They get excited about the role and people, but don’t ask for a redacted board deck or what the numbers look like. Mark says you could even ask to have a talk with a board member, not to sell themselves, but to ask questions.

Like many of our guests on Growth Everywhere, Mark encourages you to hire people smarter than you. Or as Mark describes it, “as a non-technical CEO, you’ve got to make sure that you have a team in place that can support you.”

Doing comprehensive background checks 

Mark advises to stay involved in the interview process as much as possible and has found background checks to be critical in business building. But he goes beyond just confirming the person worked there and do an in-depth background checks with former investors of the people that you’re hiring. For Mark, that includes contacting everyone from former board members and former employees to get a really get a good feel for who this person is. To help find the perfect fit at StumbleUpon, Mark knew they had to be comfortable with mystery and the unknown and also have to understand the space.

Mark says when you’re dealing with reference checks, make sure to ask a double puzzler and don’t set the person up for the right answer. Most people might say, “Well we work with a very pressurized environment where we ship a lot of product.” But what you really want to know is how will that person do in that environment? What the reference would say is, “So and so is very good in this environment, works well under pressure.” Questions you want to ask is, what type of environment does Eric succeed in?

Mark points out there’s really no right answer to that because he knows what the answer is, but the reference doesn’t know the answer and then you flip that and say, “What type of environment where this person does not do well?” Again, the reference doesn’t know what the right answer is. That’s the right way to ask these questions because you don’t want to set them up to give you the right answer.

Links mentioned in this episode:

[spoiler title=’Transcript’ collapse_link=’true’]

Eric Sui: Hi everyone, welcome to this week’s edition of Growth Everywhere where we’ll interview entrepreneurs and bring you business and personal growth tips. Today we have StumbleUpon CEO, Mark Bartels. Mark how are you doing today?

Mark Bartels: Good, thanks Eric. Good to be here.

Eric Sui: Great, why don’t you tell us a little bit about your background first and we’ll talk about StumbleUpon.

Mark Bartels: Born in South Africa. Qualified as a Chartered Accountant in South Africa. I call myself a recovering accountant. Then moved to Bay Area around 2004. Got into some mergers and acquisitions working with some property groups as well as Delloite & Touche and then moved over to StumbleUpon in 2008 as the CFO. Then we spun ourselves off from eBay, which was really interesting and I learned a ton. We re-capitalized the company and then I became the CEO at the beginning of 2013. It’s been around a year and ¾ now.

Eric Sui: We’ll talk about StumbleUpon a little bit. Can you give the audience a little insight of what StumbleUpon is and how it helps them exactly?

Mark Bartels: Absolutely. On the consumer side we still very much stick to our roots which is one-click recommendations. You click the StumbleUpon button and you get a great piece of content. It’s that one-click discovery of sequential recommendations that keep people coming back.

On the business side, at the moment we’re number 5 in terms of distribution of social media traffic to websites so we’re a big barber of traffic and we also allow advertisers to pay for distribution as well, so 1 in 10 stumbles will be a piece of paid content and we actually monetize that incredibly well. We’ve got the consumer side which is one-click discovery, which is the precursor to search and then on the business side we’ve got the distribution platform which you can pay for as well, so those are the two things we can concentrate on.

Eric Sui: How many users approximately, does StumbleUpon have today?

Mark Bartels: At the moment we’ve got about 35 million registered users. We’ve seen a huge push onto the mobile front. The majority of our activity now is on mobile. We’ve seen that transition, as everybody else has, over the last year and a half to 2 years there’s been a huge shift to smartphones and tablets. StumbleUpon is perfectly suited for that transition, which has been great, that whole lean back click a button, get something great and be entertained. It’s good to be moving with the flow that everybody else is seeing.

Eric Sui: That transition to mobile is not exactly always the easiest thing, especially when you have 35 million users. Can you talk a little bit about that transition?

Mark Bartels: If you think about it, StumbleUpon started off as a MarsBaR extension. Where we rode off one of our growth earlier on because MarsBaR was the leader when it came to browsers. StumbleUpon was heavily promoted, people would download the MarsBaR, we would then be packaged as part of that and we saw some powerful growth. We then started to see this shift to downloadable extensions to more web based stumbling. Where you saw Chrome hit the market really hard and start to take a lot of market shares. That was our transition from downloadable extension to just the web black experience, which was still good but people would have to come to StumbleUpon and click the button while when you had the browser extension, it was persistent and it was right next to the “back” button on the browser so you would think about clicking back, you’d click stumble.

The next transition then was into mobile. Initially we were a little slow to get into mobile, also because publishers and content creators were also trying to adapt to mobile. Pages weren’t rendering very quickly and so it wasn’t an ideal experience. What we found is, now that we’ve invested very heavily into Iris and Android, we’ve seen that at the same time publishers and content creators caught up. So the Stumble experience continues to get better and better because we serve up the page in its native format. We don’t package the text and put it into a separate content so the speed in which it renders is very important for us.

The next thing was, with search, you’ve got to type in something because you want something. With discovery, again, that precursor, but we want it to be really simple where just a swipe, or it’s just a gesture and you get something new. That’s where, again, mobile is working for us. You’ve seen that with StumbleUpon and you’ve seen that on video recommendation product as well, where, it’s just one swipe and you get something good and then you can react to that, in which again, the timing is working vastly for us.

Eric, I’ve quickly gone into one other area, which is with mobile, what you also see is you start to fragment the search environment. In the past, when web was king, you would type in a search query, Google would take you to that particular page. Now with mobile, that whole ecosystem is being fragmented and publishers are now looking for other ways for platforms to drive traffic to their mobile applications and that’s again where StumbleUpon is coming in, that’s exactly what we do. I find that, yes, that’s where the users are going but I found that the greatest content now is also starting to move to mobile so that suits us.

Eric Sui: Thanks for that explanation. I’ve used StumbleUpon ever since college or maybe even high school and it’s interesting. Perhaps you can share some information, what are the most popular type of content in StumbleUpon, just out of curiosity.

Mark Bartels: It’s the usual suspects. You look at our top 5 categories, its humor, bizarre oddities, student cooking, entrepreneurship, technology. You also find that that’s sometimes sculpted by the founders. There’s the Young Founders in Canada starting a company and a lot of the topics were technology focused. What we’ve seen is as we’ve broadened that you start to invite other users into the experience as well. The demographic is still very much 18 to 24 year olds.

We are seeing a push into a stronger female demographics like the older female demographics which is great as well because you find that on the female side, people tend to share more, they tend to be more social. While the males tend to be more lone wolf. They tend to discover and bookmark for themselves. So to pull a healthy community you want a good balance of people who share but also people who are very active at the same time. Very active users ingest a lot of contents for a purpose which then strengthens the purpose and the quality but you also want people who share a lot and discuss the content that may invite other people into the community as well.

Eric Sui: You talked a little bit about the past, you had the MarsBaR and the Chrome extension and things like that, for mobile, just going back into the mobile discussion for a little bit, and how are you guys acquiring users through mobile right now?

Mark Bartels: The majority of our traffic for mobile, obviously app stores are great funnels for us and they always will be, I think overall, the world has changed for app stores a bit. 2-3 years ago if you were promoted in the app store, that was a huge surge. Now it’s just table stakes. You have a ton of competition in the app store to use that as your primary traffic acquirer. We don’t pay for traffic at the moment. One of the things that really help something like StumbleUpon, is when people find great content, the first thing they want to do is share that content.

They tend to use Twitter, Facebook, and email finally in our store a lot of people will cut and paste the link from the browser, put it in an email and send it out. What we find is, friends and family, what people are now calling this dark social network, which is not just your traditional Facebook or Twitter but networks that people have internally, people will click on the link, they’ll come into the experience and then will pump in to download the application. We found that once you’ve downloaded the app and it’s on the phone and you had that first session, and we get you to connect with a few people, probability of you coming back is really high. The other thing we’ve concentrated on is building up the community and allowing you to share that content because we know that’s a great growth funnel for us. Once people share the experience of the visitor coming in, that first time experience for someone experiencing StumbleUpon has to be fantastic and you’ve got to get them to download the application,

Eric Sui: Back tracking a little bit, you coming from an accounting/finance background, I have a lot of friends in the finance world too, how does someone transition from doing accounting to becoming a CFO and then eventually becoming a CEO. Short question would be, what was that experience like becoming a CFO to a CEO and what did you learn from it?

Mark Bartels: You have to be curious about the space. This is the thing that I found when I moved to the valley was that we’re quick to label people. We’re quick to say, “You’re a designer, you’re an engineer, or you’re a finance guy” and if you’re willing to drop the label and ask yourself, “what am I interested in?” For me, I was interested in community, I was interested in social, I was interested in consumer web and that was where I was passionate.

For me, if you’re going to join a smaller company, when I joined Stumble there were 16 people. Joining a company of that size, it doesn’t matter if you’re in finance or if you’re in marketing or if you’re in engineering, you touch everything and so that becomes an education in itself. My advice to people who want to transition out of a specific label or a specific role is if you join a small startup you will see everything. You will understand “what does growth mean”, “what does engagement mean”, “what are the product managers doing”, “why are we hiring engineers”, “what is a product marketing division do” and all those things are things you learn when you’re in a small company.

I think, danger is, when you get into a big company, by “big” I mean 2,000 – 3,000 people you tend to be very solid so it becomes really hard to jump into other areas. What we’ve seen in Stumble a lot, where people would join, especially on the marketing side. People would join on the marketing side and they’ll transition into a really solid product manager if they’re passionate about the product, they’re passionate about the space, you have to do some investigation. My advice to people is be curious and put your hand out and start to understand how the rest of the company is working because you can go in a number of directions.

From a CFO point of view, you tend to see a lot of transitions into a COO role, which is, I’m going to handle HR, I’m going to handle finance, I’m going to handle everything other than product and engineering. I just find that that’s interesting stuff, the real meat is understanding the product and understanding the engineering side of the business. That was where I transitioned into and I was lucky enough to work with very engaged founders and people I could learn from and then transition into that role.

Eric Sui: It’s like doing a startup is like going to college again in where you get to dip your hand into so many different things and kind of decide on what you really want to do in the long term right?

Mark Bartels: Absolutely, Mark Suster from Bothsides of the Table wrote a great piece that I still share with people when asking about what they should do or which career they should go into, it’s called, Should I Learn Or Earn? I think you get to a point in your career where you should earn when you’ve developed enough experience. But earlier on, I always say to people, “Look, are you looking to learn? And if you’re looking to learn then sometimes you’ve actually got to take a step back in your career.”

When I joined StumbleUpon I took a massive pay cut and that was because I wanted to get into this space and someone has to underwrite you when you move into a space like this and you’ve got to be prepared to make a sacrifice as well. I really do think that you can develop some best practice. There is a down side to joining a company too small and I think sometimes you see this where people will come out straight of a university and join a 10-person startup and they’ll maybe get into any one of the disciplines where you sometimes miss out on some of the best practice that you do get at Google or Microsoft or Yahoo where the best practice that you develop at these bigger companies is working with solid experienced veterans where they’ll be able to say, “Ok, Mark, this is how you do a deal.” “This is how Edgar should work.” Or “This is how a PRD looks like.”

I sometimes feel that people miss that step when they jump straight into a startup so there’s nothing wrong with going to a bigger company for 2 to 3 years to develop some of that or at least hiring in some senior people where that mentorship can happen. You’ve got to be careful that you don’t miss a step sometimes and find yourself as a startup veteran but lacking in some startup skills.

Eric Sui: Let’s look at some hypothetical situations. I come out of college. My goal is to be in finance. I want to make $100 – $150k, something like that, what would be your advice to them in terms of the size of the startup they should be joining? I’ll let you answer that first.

Mark Bartels: Let’s just say in finance, you’re in finance, one of the things that you’ve got to first detach from is starting with your salary. You’ve got to decide what you am I passionate about. Where do I want to work? If you’re in San Francisco, you’re in a company town so it’s probably going to be one of the internet based companies and I see this a lot where people get hung up on title. What you’ve got to say to yourself is, which space would I work in and who do I want to work for? I was lucky enough, at Stumble, I worked under Michael Buhr who was then the CEO of StumbleUpon. He was fantastic. He was a great mentor. He’s someone that I still talk to today who could really start to guide me through how to think about these things.

It was the same thing with Dave Feller who was the VP of marketing. He’s now gone on to start Yummly. Again, someone who had been there and done it. Who I could then work with. So, when I’m looking at what type of company to join, you have to look at the type of people that you’re going to be working for. Who are going to be your mentors there? That is the first question you’ve got to ask yourself. Get to salary and get to that type of stuff later. Sheryl Sandberg said this, we’ve all heard this quote when she joined Google, she was thinking about titles and Eric Schimdt said to her, “Look, when you’re going to join a rocket ship, just get on.” I think that’s the important thing.

Another interesting thing I see in the valley is, people don’t do enough diligence on the company they’re joining. They tend to get excited about the role, they tend to get excited about who they’re working with and they don’t ask that second level of questions, which is, “Can you show me a redacted board deck?” “Can you show me what the numbers look like, what do your projections look like?” You can even ask, “Would you mind if I had a conversation with a board member?” “Not to let them sell me, but I’d like to ask some questions.” It’s very telling what the company would do…I’m happy to show a redacted board deck with a potential employee because I think you should do diligence on the company you’re joining and you should understand where it’s going over the next 2 years because, as you said earlier Eric, this is your MBA in a sense.

So you want to be joining a company where you’re truly going to be learning and you learn when you scale. You don’t learn when the company is at a resting state because that’s not where the finding is, that’s not where the hardship is. The hard steps is when the company is growing, you’re hiring a lot of people, and now your role starts to change and you start to either adapt or die and that’s the interesting part. Seeing who can scale and who stays the same.

Eric Sui: Got it and I love it. Let’s talk about 5By for a little bit. Can you tell us what 5By is and what’s going on with that right now?

Mark Bartels: 5By is a great story. Last year I got an email from someone saying, “Mark you’ve got to meet this guy Greg Isenberg. He’s up in Canada. He started this video recommendation company and he had a lot of similarities to StumbleUpon.” One of the principles we have at StumbleUpon, it’s also because we’re a discovery company, is that you do not sign NDAs when you come into this company. You come in for a meeting, you go in there, you do not sign a NDA. That’s because we like to create and promote an open environment where people come in to learn. So Greg came in and I didn’t see him as a competitor.

I just saw him as someone who I can sit down with and maybe learn something and it was amazing because Greg was trying to solve the same problems we were trying to solve because discovery, first of all, is a different beast to your normal utility type of environment-like search and on top of that, Greg was looking at one vertical which was video. It was like, swipe, see a video, share the video and we were dealing with the same things, what do you do with community, what do you do with the sharing, how do you get people back into the service. So people have very long sessions in StumbleUpon but one of the problems we saw early on with StumbleUpon is the #1 reason people stopped using us, was that they forgot about us.

So we had to think about ways to bring you back in and Greg was asking the same questions. So he left, went back to Canada. A couple of months went by. I then learned that Greg was back in Silicon Valley, it’s a small town. I reached out to him, said, “Hey, why don’t you come in.” His team was looking to maybe coming down to SF. I said, “Why don’t you come into StumbleUpon? We’re trying to solve the same thing. You can incubate within the company and you can grow this brand with sacred vertical within NSU…”

At the time a lot of this stuff was happening, Instagram was part of Facebook. Onetap hadn’t happened yet, I’ve seen Tinder within ISC, it started to be incubated, so we were starting be quite a popular thing. It was easy for me to sell that internally to the board. So, Greg came on. We moved the team down from Canada, which was important too, I wanted the team in the same office as StumbleUpon because with M&A, what you want to do is also, when you bring in a small team like that, it’s got to benefit the bigger company too. I see it as a talent and energy injection into the bigger company, which is StumbleUpon and at the same time it’s the love of learning that we had around constant recommendations from duplicates to spam, to staining a corpus that we thought we could help 5By on.

So, we brought the team down, we launched in February of 2013. We were promoted in Apple and Android, which was fantastic and then Greg started working on the conversations side of the platform. We saw that a lot of people were finding great videos and then sharing via SMS, which, 1) it was interesting because they were using the address book; but 2) the problem with that is when someone shares with SMS, they leave the platform. What we wanted to do was keep you within the 5By ecosystem. The great thing about this was we quickly saw that it was working on 5By so we adopted it on StumbleUpon as well. We released SMS sharing and had better conversation feature on StumbleUpon and within a week it has surpassed Facebook as the second biggest sharing mechanism on Facebook.

So, we knew SMS was working. So 5By, just on Wednesday, released its new version which is finding and sharing and having conversations around video and it’s now in the App Store and the Play Store and we’re super excited about it. Again, because we’re learning so much on the Stumble side and it’s so cool to have a much smaller product team, launching it. It’s a full agile team just launching and growing. It’s been fun.

Eric Sui: Sounds like a match made in heaven.

Mark Bartels: Yeah. It’s been great. I think the average age is 25 and it’s a full Canadian team and we’re having fun.

Eric Sui: That’s amazing because everyone is going into video now. Us, as an agency, everyone comes to us like, “Hey, do you guys go into video?” and things like that. I guess that’s the next big thing. One of the questions there is, when do you know it’s the right time to put M&A cross into the action?

Mark Bartels: That’s a great question. It was quite fun. When you put your M&A hat on, as a CEO, you have to put your VC hat on. VCs are making directional bets every day. They’re looking at where the industry is going, where is the space going and what voice do I need to back and we got to the point where it is well to be bolded by this. So we could bold Stumble video internally and heavily promote it or we could take this team that’s executing incredibly fast that started with mobile first and buy that team and bring them in. The first debate you’ve got to have is, do I bold this or do I buy this? How do I leapfrog into this area very quickly?

The second thing we were seeing was, the amount of time that our own users and the users in the industry were spending on video. The AOS aspect challenge has validated this for us. If you saw how people were uploading on Facebook and communicating on Facebook, normal users, this was not production stuff, this was people very comfortable communicating on video. Again, that was a big leap for us where, again, validated that we’re going in to the right space.

The other thing we’re seeing is, the way the web was moving is it was becoming quicker and easier to upload great content and you’re seeing that with Vine, you’re seeing that with Snapchecks. We saw the indicators moving in that direction and I think now, with the timing we actually ended up in the good position where you’ve got a lot of these content partners, bigger studios that are looking for distribution but they’re looking for distribution on mobile.

The advantage we have is that we have a mobile first platform. It’s very quick and easy to share content. So then you go out and you partner with these bigger content creators where I think that’s the key to your distribution and growth strategy. For a video startup is, go and partner with great content creators and bring those great content creators onto your platform and do co-marketing arrangements with them and let them promote the application because great content will bring users onto the platform and that in turn drives growth.

StumbleUpon has a fantastic monetization strategy as well. One of the things we do incredibly efficiently and very well, is monetize our content. So, as the mother ship, StumbleUpon can then subsidize that as well, and say to these big content creators and big partners, “Look we’ll even give you a rare share, come in, give us your content, our users have a great experience and guess what, we can monetize this incredibly well as well.” So if we scale, we’ll then give you a rare share as part of that. So that brings in content creator, you give them distribution and later on you give them revenue. Our users win because it’s a mobile first experience and they’re getting all these great content. It’s got to be reciprocal. Your content creator’s got to win and you’ve got to win at the same time.

Eric Sui: If I’m using 5By or let’s say I want to advertise on StumbleUpon my assumption is I’m going to be able to advertise on 5By eventually or is that happening already?

Mark Bartels: It’s happening with some limited partners. We haven’t actually integrated it into the StumbleUpon system which was self-serve and manage at the same time but it’s exactly the same thing if you think about it.  You’re in StumbleUpon, you click, you click, you click and then you get a piece of content that looks and smells exactly like a normal piece of content that is targeted to you as a sponsor and it’s very easy to do that same thing with 5By because the flow is the same.

You lean back, you swipe through, you see a great piece of content and if you partner with the right people, I think the good news this here is advertisers and brands have caught on to the fact that: a) People have been in blindness, CTM model is slowly starting to change and users have a great experience if you target them correctly and you give them a great piece of content. So we’ve all seen it. I remember the Vitamin Water campaign in New York where the guy was in the subway and he’s telling everybody how great his life is. That was a great piece of content that did exceptionally well on StumbleUpon and other networks. That’s what I hope to seen on 5By as well.

Eric Sui: I can’t wait to check it out. 5By was actually on Product Hunt yesterday or the day before, crazy uploads. I’m excited to check it out. Let’s talk about something tougher. Let’s talk about layoffs. What was your experience, I’ve read in the past that you had to lay off 30% of the staff. What was your experience with that?

Mark Bartels: Layoffs are not great. Especially in a small company. Sometimes layoffs don’t, at least in StumbleUpon’s case, did not correlate to how people were doing. It was a decision we made based on what we wanted to focus on in 2013. When I came in, what the focus point for me was product and engineering and I felt that one of the things we had to do in StumbleUpon was improve the mobile experience and improve the community experience.

Make sharing easier, make conversations easier. In order to do that, a) we needed the cash flow to do it but also we needed to focus on that. We needed to have bigger teams that are focused on marketing and on business and at the same time you’re looking at where your focus is going to be for the next 12 to 14 months, then you’ve got to make some tough decisions and so my advice to people would be is, don’t hesitate on that stuff. Once you’ve made your decision, move quickly and communicate very heavily and be very transparent with what I call, the survivors.

That’s what sometimes people forget, the executive team and the board is very concerned about how or where are people going to land and how is this going to be perceived. My advice to people is a) focus on, once it’s done make sure you focus on the people that are left because those are the people that are going to have to help you make it through the next 12 months. The second thing is, for a company like StumbleUpon, with a big community, what tends to happen is we focus on the valley. What will the investors think, what will the press think within Silicon Valley? And, the majority of users are actually outside of the valley. The millions of users that use on StumbleUpon are not thinking about layoffs.

They’re still just thinking about what’s my experience going to be on StumbleUpon and we sometimes lose sight of that. We tend to get very insular and we focus on what investors, employees and what the press inside Silicon Valley are going to think but we lose sight of what our community is going to think. Most of the time your community just wants a great experience every day. That’s important when you’re thinking about messogening, you’re thinking about how it’s going to be perceived, we tend to be a little too insular. Think about that next time.

Most of the time, the news hits, yes it doesn’t look that great, and people move on. We were more concerned about making sure that our people find a good place. Making sure that we supported people that were looking for new gigs and then in turn focusing on the people who are still with the rest of us.

Eric Sui: Psychologically how did that affect you? Transitioning from CFO to CEO and then this is you having to drop the news. How did that affect you?

Mark Bartels: You definitely experience social capital when you do something like this. Becoming CEO internally as well. The advantage is that you understand the company. You understand what needs to be done. The down side is when you’re promoted internally, you don’t have as much social capital as say a CEO coming in from the outside. It takes time to rebuild the company. The good news is, we’re back and hiring as fast as we can again and that debt is paid off.

I think that’s what tends to happen right? In an economy like this where it’s incredibly hard to hire and got even harder to hire, I think it would have been tougher to that reset in 2014. In 2013 the economy was starting to ramp, it started to get super hot but it hadn’t got to the point where at the end of the year last year and now it’s been absolutely bonkers and so we definitely had a bit of flex there to be able to do it. The other thing I did was in 2013 – 2014 I brought in a new VP of Engineering and a new VP on the products side David Marks on products side and Paul Antaki on the engineering front and it’s been incredibly helpful for me.

As a non-technical CEO, you’ve got to make sure that you have a team in place that can support you. Teal Newland in New York, having Edie Dykstra on people operation and Paul Antaki and David Marks and then the other great thing we had was acquiring 5By. Greg Isenberg who’s the CEO of 5By is also now part of the leadership team which has been fantastic for me. Going through that transition and then rebuilding the team, you have to make sure that you have that strong set of lieutenants that can support you through this because hiring is so key. So having people that can go out and hire as well. The 5By acquisition definitely helps us there as well because it brings a strong signal to the market that StumbleUpon is back.

We were inquisitive and then there’s nothing better than executing. When you execute, you start to exercise that muscle again. Internally people see it. I know press is hot more than anything else but it does help because people see it out there. They see the recognition and it definitely helps with hiring as well, so the best way out of restructuring is to execute, put your head down and start to get that validation from the press, from outsiders and from your community that you’re back and you’re hiring.

Eric Sui: You alluded to being a non-technical CEO, obviously bring in a great VP of product and a great VP of engineering, two different nuances. How do you qualify these people? What are some tricks that you can share with the audience?

Mark Bartels: Leverage your board, leverage your investors as much as you can. Be involved in the interview process as much as you can as well. The other thing that I find that attracts great talent is when you’re in a position like me, where you’re a non-technical CEO is make sure that the product person and the VP knows that when they come in, it’s theirs. That’s very attractive to people that want to come in to a company our size because my pitch to a lot of these VPs is, “Look, you’re going to own product, you’re going to own engineering.

There’s not going to be a dotted line to me. Yes, absolutely, I’m going to be involved but ultimately, this is your team to grow and this is your team to hire.” That’s very attractive to certain people because you get a lot of senior directors that want to come in and become VPs but some of them are starting to look at that CEO role as well and if you give them that type of independence some people like that. I think sometimes there’s a bit of reluctance from people to join companies where there’s a very technical founder because they’re actually asking themselves, “Well, am I truly going to be running engineering or am I truly going to be running product or is there always going to be this dotted line?”

The other thing that I found that was critical for me was that you have to do background checks. I don’t mean just does this person work there. You have to do in-depth background checks with former investors of the people that you’re hiring. Former board members, former employees, and really get a good feel for who this person is. For me, at Stumble, one of the attributes I was looking for was, a) you have to be comfortable with mystery and the unknown and b) you have to understand the space.

Bringing in David Marks who was the former CTO and founder of Lumia which was a B&B recommendation company that was key for me. I wanted a very technical product guy that could come in and obviously understand and see around the corners when it came to req and at the same time David was very comfortable in the environment where you’re a small company where he could run his own company and I knew he could run on his own.

On the engineering side, what I wanted was someone who could execute very quickly. Bringing in Paul Antaki from SalesForce, Paul understood how to build teams and that was one thing I keep asking the team, “Do you want a maintainer or do you want a builder?” If you’re hiring a builder the reference checks are key. Has this person been promoted internally? Has he built a team? We’re not at the size where I want the head of engineering to maintain the product. I want someone who’s going to be building things going forward. Building mobile products, building publisher tools for advertising. You’ve got to have someone who can build and re-form teams. That was a long answer Eric but building your executive team with the help of your board is probably one of the most important thing a CEO does.

Eric Sui: That was a good answer. I’m glad that you took the time to explain it because I think it’s a thing that a lot of people overlook. Perhaps I can even get a list of questions that you ask when you do these reference checks. I think reference checks are something that people half-do a lot and I think it’s something that will bite them later.

Mark Bartels: Absolutely, with reference checks, you’ve got to make sure to ask a double puzzler which means, don’t set the person up for the right answer. What people typically do is say, “Well we work with a very pressurized environment where we ship a lot of product.” How will that person do in that environment? What the reference would say is, “So and so is very good in this environment, works well under pressure.” Questions you want to ask is, what type of environment does Eric succeed in? There’s no right answer to that because in my mind, I know what the answer is but the reference doesn’t know the answer and then you flip that and say, “What type of environment where this person does not do well?” Again, the reference doesn’t know what the right answer is. That’s the right way to ask these questions because you don’t want to set them up to give you the right answer.

The other question you should ask the reference is, “Give me another reference.” What you want to do is you want to talk to someone whom that candidate has not given you because that’s where you’re going to get some of your most honest answers and honest assessments on the person. You typically find that references will give you want to know. What you want to do then is go to that second level of separation and find out the answer there.

The other great tip I learned the other day was when you’re interviewing someone you should ask them, “What would this reference say when I speak to them?” That gives you your first data point because a) you’re probably going to get an honest answer from the candidates and b) then you can take that and go to the reference and you can ask that question. The other advice that I’d give is temporize your questions. Make sure you ask that same questions each time. Don’t ask every reference a different question because it starts with becoming consistent.

Have your set of questions and then go and ask those references the same questions. That tends to give you a bit more consistency as well. It’s amazing how many times people don’t do references and it bites you. I feel like, yes, the interview process is good but it’s flawed and the reference checks and second degree reference checks are probably where you’re going to find out most of what you know about the candidates. What I found is, those references tend to help you with the first…when the candidate that you’ve hired tends to do something that’s out of character that’s when it worries me, so when a reference tells me, “Hey, this is how he or she acts under pressure…” It helps me because it helps me manage them.

The last question I ask is, “What will this candidate do in the first hundred days?” In the first hundred days, kind of like the president right? The press always tend to take that first hundred days and say, “What has he or she done in the first hundred days?” I find it useful because it tends to tell you a little bit about their personality sometimes the answer will be, “Well, she’s going to sit and do nothing for the first hundred days.” Sometimes I get, “No, she’s going to break glass in the first 30 days.” Then it helps me, is this the person I really want. Again, there’s no right answers to that but you’re going to get a good piece of feedback.

Eric Sui: Great questions. What I’m going to do after this is, I’m going to have my editor put together as a checklist so we’ll offer it to everyone. One thing I learned from Scott Cook of Intuit, he asked a lot of the same questions you asked, “How does this person stack up to their peers in the scale of 1 to 10?” When you find them saying lower than 8 or 9, you know there’s something wrong.

Mark Bartels: That’s a great question. I always find that looking at a candidate that has been promoted internally at the existing company and recognized by their peers is always a good sign. Someone who has jumped from company to company and been promoted through the jump, that’s a bit concerning. Sometimes people say, “You know it’s a bad sign if the person has been in the company for a while.” Not a bad sign if they’re constantly promoted within the company and you can see that they’ve been progressing and they’re hungry. There’s nothing wrong with that.

I think some of your best VPs come from people that you’re prepared to underwrite and say, “You’re a senior director here or you’re a director here but you’re whip smart and you’re hungry. I’m going to make you a VP, I’m going to take the chance on you.” Sometimes those are the best candidates.

Eric Sui: The last few question from my side: What’s one piece of advice you’d give to your 25-year-old self?

Mark Bartels: Now that’s a good question. I would say, be curious and you have more time than you think. I look back from 35 to 25 and the amount I’ve learned over those 10 years is, be more open to experimentation and be more curious. I think at 25 I was worried that my time was running out. That I had to make a choice and do this. I think if I had known how much time I really do have…think about it. Go back 10 years from 25, you were 15. How much did you learn from 15 to 25? I feel like for the next 10 years, I’m 38 now, I lose track, over the next 10 years, by the time I’m 48, I think I’m going to have learned even more. It actually goes up exponentially. So take your time, and there’s more time than you think.

Eric Sui: I love it! It’s kind of like the crisis I’m going through right now, so I love it. That’s something I’ll take to heart too. What’s one productivity you have that you can share with the audience?

Mark Bartels: Don’t check your email first thing in the morning. Wake up, have breakfast, shower, stretch, do some exercise and then block out your time in the morning for 2 hours or an hour and a half to get to that initial time for email. I found that getting up early in the morning, I get up at 5:30 in the morning, I exercise, I have a healthy breakfast but I don’t check email. I find that once I sit down and block out time, which is early in the morning before the rest of the day has started, I find that I tend to get through the majority of my email and then get to work.

A good example is today, by the time I got to work, I had a block of email response and doing a lot of the admin so I can be completely present now while I’m talking to you. I find that when I wake up in the morning and start to haphazardly check email it’s a huge time drain that I’m not productive. That’s a way for me to manage email very effectively so that when I get in in the morning, I’m on time for my meetings and I’m not roped in by emails from the past. It also allows me to be energized in the morning because the worst thing you can do is wake up and check email. That screws up that 30-40 minutes where your body is waking up and I feel that I have a much more productive day if I’m really regimented early in the morning.

Eric Sui: I couldn’t agree with that more. Final question: What’s one must-read book you’d recommend to the audience?

Mark Bartels: I would say, Endurance by Ernest Shackleton, a Shackleton book, it’s about this expedition to the South Pole and how this ship got stuck and Shackleton had to take this team and has to motivate them and has to plan around a lot of uncertainty and move this team safely to the mainland. I was reading this last year and there was just so many correlations to running a team and building a team and it’s completely unrelated to technology but if you look at how he had to recruit a great team, how the type of temperament really mattered, how he endured with crew members that were thinking about mutiny, some people were demotivated and then keep going and get to the mainland.

I thought it was incredible. Just a great book to think about. I know there’s only one but the David Plouffe book on the Audacity to Win, talking about Obama’s early campaign. Again, just a brilliant book, non-tech related but just how this young senator goes to his team, this scrappy startup, and turns it into this massive campaign that goes on to win the presidency. The Audacity to Win is an amazing book to read. Two fine books.

Eric Sui: Great! I think these two books tie around what it takes to really win to building a business right?

Mark Bartels: Absolutely. Be comfortable with uncertainty. Build a crack team and deal with a lot of setbacks and keep going. That’s the theme. You know this Eric, as I do, that’s coming in every day. The advice someone gave me when I took over was, “As CEO, you get good news during the day go home because in the next 30 minutes something else is going to happen.”

Eric Sui: Mark, thanks so much for sharing your time with us today. We definitely need to have you on the show again sometime soon because there’s a lot to talk about. Everyone, this is Mark Bartels from StumbleUpon and everyone should go checkout 5by.com as well. Thanks Mark.

Mark Bartels: Thank you Eric, cheers and have a good day.

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