Omer (00:11.840)
Welcome to another episode of the SaaS Podcast.
I'm your host, Omer Khan, and this is the show where I interview proven founders and industry experts who share their stories, strategies, and insights to help you build, launch, and grow your SaaS business.
Today's interview is with Rand Fishkin.
Rand is the co founder of Moz, a Seattle based SaaS company that sells inbound marketing and marketing analytics software.
The company was founded in 2004 as a consulting firm and shifted to software development in 2008.
The Moz website has an online community of more than 1 million digital marketers, and to date, the company has raised just under $20 million in funding.
Rand, welcome to the show.
Rand Fishkin (00:56.540)
Thanks for having me, Omar.
Omer (00:59.500)
I'm delighted to finally be talking to the wizard of Moz.
So great to do this.
Okay, now before we talk about Mars, can you tell the audience a little bit about yourself?
Who is Rand when he's not working?
Rand Fishkin (01:10.940)
When I'm not working, let's see.
I am.
I try to be a good husband to my wife Geraldine.
I would say that's the.
The primary activity that I have outside of.
Outside of my work is spending time with Geraldine.
We travel a lot together.
She runs a travel website called everywherest.
And let's see, other things.
I'm a little bit of a fan of NFL football, somewhat ashamedly.
I think there's a lot of terrible things about the NFL, but I still really enjoy the games.
And I used to be a big outdoorsman, I think, before Moz got kind of hot and heavy.
And so maybe one day I'll return to that as well.
Omer (02:01.920)
Great.
I love Geraldine's blog, by the way.
When I was doing research for this interview, I came across the blog and it made me laugh.
Rand Fishkin (02:14.560)
That it will do.
Geraldine has something very, very special and unique.
So we're going to talk about inbound marketing and SEO and social media and all these channels to acquire traffic.
And Geraldine is one of the least active promoters, marketers for her blog, and yet she still gets 100,000 plus visits a month there.
Omer (02:33.960)
Wow.
Rand Fishkin (02:35.160)
A huge part of that is just she's created a very addictive form of content for a certain audience.
Right?
People go, they read, and then they just come back again and again and again.
It's pretty.
It's pretty remarkable.
And it's somewhat frustrating for me to sometimes tell her, you got to do SEO so you'll get more traffic.
Look, I'm getting more traffic.
Omer (03:00.610)
All right?
Now, before we kick things off, we like to just hear a success quote from our guests to better understand what drives and motivates them.
What is one of your favorite quotes?
Rand Fishkin (03:15.740)
So there's a.
He was a writer, among other things, from Abraham Heschel, and he said, this is one of my favorite things and something I certainly believe.
When I was young, I admired clever people.
Now that I am old, I admire kind people.
And I think implicit in that statement is that with wisdom comes admiration, not for intelligence or accomplishment, but for kindness and generosity.
And I think those, those things are inherently more worthy of our praise and our attention and unfortunately don't always receive it.
Omer (03:55.400)
Great quote.
Okay, let's, let's start by giving our listeners, for those people who don't know, a better understanding of Moz.
Can you tell us a little bit about who your target customers are and what are the top pain points that you're trying to solve for them?
Rand Fishkin (04:10.510)
Sure.
So our customers are primarily professional marketers.
They come in one of three varieties.
An in house marketer working on a team at a startup or a company of really almost any size, all the way from four person tiny new company to I think we have something in the range of 30 or 40% of the Fortune 1000 have a Moz account.
Right.
So somebody on their internal marketing teams has an account.
And then the second group would be agencies.
You know, agencies that help people, usually that help people do SEO professionally.
Sometimes those agencies also help with things like pay per click and social media marketing and content marketing, those kinds of things, but definitely SEO.
And then the third group would be independent consultants and independent entrepreneurs or solo entrepreneurs who focus a lot on SEO.
So we sort of have those three groups, independent agency and in house.
Omer (05:17.200)
Okay.
Now I mentioned earlier that Moz originally started out as a consulting business, which you were running with your mother.
Can you tell me a little bit about where the idea for the software business came from?
Rand Fishkin (05:37.160)
It wasn't particularly intentional.
What I want to be able to tell you, Omer, is that we got in a room and we thought, hey, how are we going to take this business to the next level?
And realized that subscription software was going to be the future and that we could have a very low cost of customer acquisition and a fast payback period and, you know, high LTC LTV to CAC ratio.
And that would make us a very attractive company for investment and for, you know, maybe an eventual IPO or a sale or those kinds of things.
That is, none of that is true.
None of that is true.
I think the, the idea was basically this.
So at the time there were, I think just three of us in 2006, maybe there were four by the end of the year, four or five.
It was basically my mom, myself, and Matt Inman, who was our first developer.
Matt, you may know him today, he runs a comic website called the Oatmeal that's relatively popular.
And so at the time, Matt was kind of building SEO tools and making websites for clients and that kind of thing at the company, which was called SEOmoz at the time.
And Matt had created some tools internally for mostly me to use and some of our early consultants when we were doing consulting work for our clients.
Right.
So we had tools that would automate some of the SEO investigation and analysis process.
And we thought to ourselves, hey, you know, we say we really believe in transparency and making things available to others.
We should make all of our tools available to other people.
Let's put them online and we'll set up a little PayPal thing so you can PayPal us some money and get access to our tools.
That is literally as far as we planned in terms of the intelligent idea for.
For what we were going to do.
So a little bit,
Omer (07:51.320)
I mean, did you.
A lot of people will be thinking about, okay, we're going to get software out there.
It works for us maybe internally, but to kind of build a commercial product, we have to think about a whole bunch of other things and how's it going to scale?
Rand Fishkin (08:07.800)
Yeah, I promise you, we did not think about any of those things, which is why the tools, for the first time, you know, a couple years, would break every week or two and could only support, like a few hundred people using them.
Yeah, it was.
It was very, very hacky, very amateur.
You know, as Matt himself said, he left the company in 2007, just before we took our first investment round.
He said, you know, I don't really want to be a developer.
I don't.
I don't like programming.
I'm, you know, I'm not a software engineer.
I don't even think we called our product software.
We were like, oh, no.
We made some little hacky tools that you can subscribe to.
And we also wrote some guides.
And, you know, you get the guides and the content if you subscribed.
Yeah.
So it was.
It really was driven by the fact that even those tiny efforts, those, you know, very amateur efforts at the beginning of our run in software had such success.
Right.
They resonated so much with our audience.
And I think part of that is because we had already built an audience that was like us.
Right.
They needed the same things that we did at the Time, because we were doing consulting, which is basically the same whether you're doing it externally or in house.
And so the product served the market and the market was already in front of us, and the market knew us and liked us and trusted us and had been reading our stuff for years.
So I think that really helped to accelerate the growth.
And then once we had that growth, of course, I think it was that summer of 2007, we attracted some attention from two local investors.
One was Michelle Goldberg from Ignition Partners and the other was Kelly Smith from Curious Office.
And in November of that year, they both invested some money.
So Michelle put in a million and Kelly put in 100,000, and we raised 1.1 million.
So don't believe what TechCrunch or Wikipedia say about 1.25.
I don't know where that number came from, but once it's out there, you can't take it back.
And then I had this crazy idea that I really wanted to build the back end of Google, specifically the link graph.
I wanted to be able to crawl the whole web, index all the links and then do the processing on them, run our own version of PageRank, run our own version of Trust Rank, because I was pretty sure Google had something like that going, and then be able to show all that data to web marketers to make Google's processes transparent.
I think my passion overwhelmed the good sense, which was you can't rebuild the back end of Google on a million dollars.
However, I found two guys actually through Geraldine.
Geraldine was friends with this guy, Ben Hendrickson from years back.
They were in debate together in high school, and he and another guy that Geraldine hooked us up with, Nick Gerner, joined Moz and they basically built what originally was called Linkscape and today is called Mozcape.
And it really was that.
I think the initial version was only like 20 or so billion pages.
As an example, today our index, our next index coming out next week I think is like 280 or almost 300 billion.
But this is a start.
And you really could, you could plug in a URL and see all the pages on the web that link to it and look at how important they were.
And that was kind of game changing.
So when that launched, and the fact that it launched successfully, it launched on a bad day.
It launched the day that Bear Stearns collapsed in 2008.
So most of the press that we thought we were going to get went in a different direction, but it still worked out.
So by 2000, I think the end of 2008, December 2008, we were back to profitability.
Omer (12:14.290)
So I want to talk a little bit back about when you launched the product or you made these tools available.
So you said that you had already built a following and presumably that was mainly through the blog.
How long had that blog, how long had you been building that blog before you launched the software product?
Rand Fishkin (12:34.690)
Let's see.
I guess it would have been just about three, three years.
Omer (12:41.010)
And what type of content were you creating?
What are you writing about?
Rand Fishkin (12:44.930)
Well, yeah, don't read stuff from the first six months of the blog, the first year, because you'll be pretty embarrassed.
It's pretty silly.
But no, I think it was one of those things where I forced myself to five nights a week, sometimes six or seven nights a week, write for three.
Well, I think it was for five years that I did it basically just myself.
Right.
So every night I'd get home from work, Geraldine and I would have dinner and then by 10pm I'd be in front of my computer and by 2am There'd be a blog post up for the next day.
And that was, you know, my goal there was to create interest, to share what I was learning and sort of my journey to get to know the process of SEO.
And then as I started to know SEO, I found, I think, a frustration point and a point of passion that I still carry with me today, which is that the search engines today, it's mostly Google, but Bing as well, have a lot of information.
They know what they're doing and they know why they're doing it, but they don't share that information.
So there's a lot of secrecy in terms of this is how sort of search engines operate.
And I'm actually a believer that they would be better off, the search engines would be better off and the market would be far better off.
And SEO would have a better name if they were transparent about it.
And so supposedly one of Google's core values is transparency.
And they believe in organizing the world's information and making it accessible to everyone.
So, you know what?
If they're not going to do it, I'm going to do it.
I felt very strongly and still feel really strongly about making Google's processes transparent to everyone.
So that it's not a mystery, it's not a secret.
SEO isn't some black magic.
It's just, look, this is how this system functions.
This is what the system cares about, and here's ways that you can improve.
Omer (14:44.740)
Do you think that that would also kind of make it easier for people to, to game the system?
If they had that level of transparency.
Rand Fishkin (14:56.660)
Yes and no.
I actually think so.
This is like one of those things that people always talk about in the security world, that security through obscurity almost never works properly because some people, a small niche, usually the most manipulative folks will figure out how to game that system and everyone else will, will not.
And so it basically becomes a bias and a win for your spammers, your manipulators.
And I think that was true of Google as well.
And I'd actually say, I believe that one of the reasons Google has become much less spam filled, one of the reasons that they have become better at fighting spam, one of the reasons that there is much less spam, especially in the SEO world.
I would say when I started in the industry, a good 20 or 30% of folks playing in SEO were spammers, were manipulating and violating guidelines and that kind of stuff.
And now I'd say that number is under 5%, probably under 2%.
So I wouldn't credit Moz with all of that.
But I would say that as, as an industry, we've made SEO much more transparent.
And I think that's actually made gaming the engines much harder.
It's made good SEO work much better.
It's made the practice much more reliable.
It means that people can actually invest in it in the long term.
Omer (16:33.480)
So looking back at those early days of launching what became the software business, what do you think was one of the biggest mistakes that you made?
Rand Fishkin (16:44.970)
I mean, everything except having a blog where people.
There is no mistake we didn't make.
So let's see, we had really terrible billing systems.
We had no metrics on customer lifetime value or churn.
We had no idea how long or short people's tenure was on average with Mozart.
We didn't understand cost of customer acquisition.
We did not know.
We didn't know anything about our customers other than what we thought we knew from interacting with them kind of on the blog and at conferences and that kind of stuff.
So we had no Personas or customer modeling or anything like that.
Basically the least professional operation you can imagine.
It's like Larry, Moe and Curly running a software as a service business.
Omer (17:40.140)
So at what point did you feel that you had enough traction there and when did you really decide that, no, we're going to refocus on the software business now?
Rand Fishkin (17:51.740)
I think it was when we raised investment, right?
So when Michelle and Kelly invested, they had a. I think they did a number of good things and one sort of.
Well, one sort of whatever thing which was they Made me the CEO.
Right.
So they said, basically, we're interested in investing in Moz.
We think the software company has legs, but we want Rand to be the CEO.
And so as CEO, I think the one thing that I was at least mostly smart enough to know was that I didn't know anything.
And so I leaned heavily on them.
I listened to them at board meetings.
I mostly listened to them.
I can be hard headed at times too, and I tried to learn a lot about the business that we were in.
Not just SEO and marketing, but venture capital backed businesses and those kinds of things.
I got connected with a lot of other venture backed CEOs and tried to learn from them and we just got more professional.
But I think that was the spark.
Right.
Michelle in particular nudged us at a lot of board meetings around, hey, these are the metrics that I expect to see reported.
This is what I want to see in the board decks.
And Sarah Bird, who's now our CEO, she was our chief operating officer, I think, starting in 2008.
We had hired her at the end of 2007, but in 08 we promoted her to that role and she started digging in and acquiring those metrics, getting those formalized systems set up, moving off PayPal and onto something a little better.
Omer (19:34.050)
Let's talk about some of the challenges that you faced as the company's grown.
Now, Moz has been very transparent about financial performance and I really like that.
And from what I understand, the company's been almost doubling revenue every year since you launched the software business
Rand Fishkin (19:56.030)
until.
Until recently.
That.
That is true.
So the first, what is that, seven, six years we doubled revenue basically every year.
2009, we a little bit more than doubled.
But in 20, let's see, from 2013-14, it grew more like 50%.
And then this last year's growth was only about 6%.
So we had a really rocky last 18 months.
Omer (20:33.280)
So in 2013, you reported record revenue over, I think $29 million, but you also posted a $5.7 million loss.
Can you tell me more about what was going on there?
Rand Fishkin (20:46.360)
Yeah, well, the $5.7 million losses, I think that's very intentional.
Right.
If you're going to go.
In 2012, we raised an $18 million round.
And so the idea is you're supposed to spend that money.
If you're going to be profitable, why dilute yourself by going out and getting venture?
And so for us, that was unintentional loss.
I think we lost probably something similar.
I have the board financials.
I could look it up, but something similar in 2014, and I expect we're going to lose 2 or 3 million more in 2015.
Our revenue is slowly ramping up, and so we're kind of making up for the hiring and the hardware investments and all that kind of stuff that we made over the last couple years, which were pretty different.
Right.
So, like the last 18 months, the business has become much more capital efficient, but it's grown at a much slower rate.
And I think, you know, part of that slowdown is some of those investments.
We moved off of a lot of our older systems, built our own data centers, but didn't launch a whole lot of great new software as a result of kind of, kind of that infrastructure focus.
Omer (22:07.810)
So in one of your blog posts, and I've got to say, reading the stuff that you write and the incredible transparency and openness you have is pretty remarkable.
And one particular post I remember reading, and you talked about how tough I think 2013 had been and that you had felt depressed and that that was a big reason why you stepped down as CEO.
Rand Fishkin (22:40.430)
That's right.
Omer (22:41.230)
Why did you feel that you had to step down?
Rand Fishkin (22:46.270)
I think I was kind of dragging the company down with me.
Right.
So you.
When you are a startup, especially when you are going through tough, challenging times.
Right.
And it's not just, hey, we're doubling year over year and we're not even working that hard, which Moz has had a couple years like that.
Those are nice years.
I would say that when you're having those struggles, you need someone who is an optimist, someone who can see the light at the end of the tunnel, who can describe that to the rest of the company and who manages the team and the attitude and the direction from that perspective.
And I was not that person.
So I think that's a big part of.
At least I had the clarity to be able to see that I wasn't that person.
You know, I had.
For whatever reason, I had thoughts in my head like, well, maybe this thing's over.
You know, maybe it didn't work out because Instead of growing 100% year over year, we only grew 50%.
Like, for some reason, I had, I think, one of the weirdest things about my depression and maybe a good illustrative example of how odd it could make my behavior.
So let's say, Omer, that you and I met in person somewhere at a conference, and we start chatting and you're like, rand, I really love Mazda Software.
What you guys are doing is super cool.
I would spend five minutes trying to Convince you that what we had built sucked and it was terrible and like, why all these other competitors of ours had better products in like, you know, niche X and Y and Z.
That is something that I would do, which is, that's not necessarily ideal behavior for a CEO.
It's certainly not going to encourage your engineers to want to work for that person.
So.
Omer (24:50.050)
But I think in many ways that's the kind of person you are.
Right?
I mean, from, from what I've seen, you're always on a personal level, always trying to sort of examine yourself and, and find those shortcomings and, and talk openly about them.
And you know, I think a lot of people love to share information when things are going well, but you don't hear a lot when things aren't.
And you're very transparent.
Where does that transparency come from?
Why, why do that?
Rand Fishkin (25:29.580)
Well, so when I was, when I was a kid growing up, my, I mean, I don't think my parents were terrible about this, but, you know, and probably lots of other people can relate because I think this is kind of a little bit of a universal thing.
But you know how, you know, your mom would say, hey, don't tell your dad that we did X and Y and Z, or don't tell your dad about X, Y and Z.
And your dad would say, hey, don't tell your mom about A and B and C. Keeping those lies straight in my head was really nerve wracking for me as a kid.
I just, I kind of hated.
Stuck with me.
And then I think I had another kind of big series of events from 2001 to about 2006, where the consulting company that my mom and I were running, which started out as her old school, you know, offline marketing consultancy and then kind of transition into SEOmoz, that business went deeply into debt.
I think we, you know, we owed like $150,000 to credit card companies and all this kind of stuff, but then we stopped being able to make the minimum payments because we just weren't making any money.
And so that quickly skyrocketed to like 500,000.
And so we had this half a million dollars in debt and, and the smart thing to do then would be to declare bankruptcy because all the, basically all the equipment, loans and credit cards and everything were in my name so that my dad wouldn't find out that we had this debt.
And the problem was, you know, we were like, well, but if we, if we declare bankruptcy and go through the bankruptcy proceedings, then Scott, who's my dad, could find out and Maybe that would hurt my parents marriage.
And so it was very, very stressful to like, keep this big financial secret, you know, from.
From my dad.
And it just sucked.
I hated, I really, really hated the just secrecy of any kind, right.
I felt like, just gave me this weakness that people could discover and then used to, I don't know, not blackmail, but like have undue power and influence.
And so I figure if.
If everything's transparent, if I share all the worst stuff, there's nothing for anybody else to find out, right?
It's kind of like a.
It's a protective shell.
It's a way to insulate myself from bad things.
There's.
There's nothing to find out.
And so there's no, there's no worse that it can get than whatever is happening now.
Omer (28:25.090)
That's a really interesting perspective.
And I think most people, you know, tend to do the opposite, right.
In terms of the less.
And especially in a public platform to, to share so much kind of almost and, you know, and show your.
Your.
Your weaknesses and shortcomings.
I think is, Is a really.
It's a natur.
And I think, you know, even when I look at myself and I think about launching this podcast, which, you know, a year ago, I couldn't imagine doing something like this, and even when I started, it was terrifying because what if people criticize me?
What if people will say you suck, right?
And, and, and I think, you know, that, that, that was a huge fear for me.
And I think, I love when I see what you're doing because it inspires me to be a little bit open.
You know, what?
Put more of yourself out there and screw it.
What's the worst that can happen?
Rand Fishkin (29:30.740)
Exactly, exactly.
I think there's a power in being your own worst critic, because there's no critic out there that can give you a hard time after that.
Omer (29:44.160)
All right, that wraps up part one of the interview with Rand Fishkin of Mars.
