Starting a business can result in one of two things, you either make money or lose it. Matt Watson has experienced both with his own company but that didn’t deter him from working on improving his product. His experiences taught him how powerful online advertising can be. He shares how startups can efficiently get on the first page of Google when people are searching for answers. As the Founder of Stackify, Matt has proven that consistent content marketing is a fast and efficient way to gain exposure and traction.
Getting Ahead Using Consistent Content Marketing with Matt Watson
My guest is a pretty cool dude himself and has been developing awesome software for the last fifteen years, but he’s here as the pastor of plenty, the rabbi of SEO, and content marketing and the entrepreneurial guru of the day. He’s going to share his best practices when it comes to making our websites and content get the most exposure possible. Matt Watson, welcome to the show.
Thanks for having me.
It’s great to connect with you. I enjoyed learning about you and about the companies that you’ve created. Let’s get started with exactly how you got yourself into that incredible business that you went off and sold for $150 million.
I was the Technical Co-founder. We talked to a lot of startups and they always struggle with an entrepreneurial business idea. They can’t find a Technical Co-Founder to help them bring it to life and I was the random Technical Co-Founder that helps somebody else with their idea. Somebody went to a car dealership and said, “I need some help taking photos of cars and uploading to the internet. It’s a lot of labor to upload all these photos. Do you know anybody, a software developer or IT person that can help me figure out how to make this process better?” A mutual acquaintance connected me with another gentleman and we started a business. I had no idea what I was doing, but I started a business.
I was on the other side of that equation when I started my software company, Timeslips Corporation. I had a great idea for a product and a shared it with my next-door neighbor, who happens to be an award-winning software developer at the time. We went into business together 50/50 and we built Timeslips Corporation, so it sounds like it’s a similar story to yours.
It was a similar story. Unfortunately, a couple of years later, or maybe three or four years later, we had a falling out with the original gentleman I started the company with and learned a lot of lessons about legal structures of companies and having partners.
Those lessons are never easy. If we skimp at the front end by not getting great lawyers and not protecting ourselves, not getting key man insurance, all the stuff that is required in business structure, then bad things can happen. You got this company started and did it start with a bang? Did it start with a whimper? Give us some background on how it went and what happened.
Like most entrepreneurs, we started out slowly building a product. We had a few customers pretty fast within the first six months or so, but I was still working full-time. I was working on my new company as a side project. Like a lot of entrepreneurs, that first year or two, I didn’t make a lot of money from it, but I was putting a ton of time trying to get it off the ground. About two or three years in, we got it going and started getting some traction. We merged companies with another company we met out of Massachusetts because we had struck this big partnership with a vendor that was going to resell our product and we needed data from this company in Boston, so we brought in some new partners.
When we did that, we made a critical flaw in agreement. As we set it all up, it required a super majority so that to get anything done from a legal perspective, from an operational perspective, the required shareholder vote, everybody had to agree. That was a terrible mistake that a little ways after, we had problems with one of the partners that had to go and there was no way to remove them. The other thing we learned there is investors don’t like that. Nobody’s going to invest in a company that they can’t have any influence on and they know that even the existing shareholders and management team all have to agree to accomplish something which the real world, nobody knows that always happens.
How did that agreement come into place?
We all agreed that we needed to raise capital, so we changed the structure of the business to be a simple majority. After that happened, we ended up having to split ways with one of the partners and got through it. We were doing this in probably about 2007, when the economy went into the toilet. We were never able to raise capital. We were in automotive, so at the same time GM and Chrysler went bankrupt along with the whole economy being in the toilet, we never did raise any capital.
That turned out to be a blessing in disguise, didn’t it?
It worked out. We were in the middle of the growth cycle for online car sales. You go back to 2003 when we started the business, nobody had digital cameras back then. If they did, they were very expensive, and they were a luxury item. The iPhone didn’t come out until 2006, so we were in the middle of everything being digital photos becoming a common thing and online shopping and picking up. The dealers were making a ton of money and they didn’t care if they spent a fortune on advertising in magazines and newspapers.
I’m sure you remember the old auto trader magazine, which no longer exists. They spent a fortune on all that stuff. When they start losing money, the first thing they do is trying to figure out how to save money. We were there at the right place at the right time to help usher them into online advertising in handling more internet leads and internet sales, so that all the money they were spending on expensive newspaper ads, now they were going to save probably 90% of it and then spend a little bit on the online side. We were able to help them facilitate that.
Since you understand the industry, where do car dealers make their money? I always thought that when they sold the car, there was a markup like with any other product. I’ve since learned that that markup is quite low. Is that true?
It is low. What do you think the markup is for a brand-new Honda Accord?
I think it should be much higher, but probably under $1,000.
It’s usually about 1% to 3% from a percentage perspective. It’s very low and it’s getting lower. It continues to go down and even in the luxury dealers from the high-end cars, it’s still 5% to 10%. The dealers make all their money in service. Not to go off on a tangent here, but that’s why electric cars are going to completely change the dynamic because they don’t require near as much service.
I knew that about luxury cars having about a 10% markup. It’s a fascinating conversation about why electric cars are so disruptive, not specifically for the reason that they were electric, but what they do. Think about what they are going to do to the insurance industry? Talk about disintermediation. It means full displacement of an entire industry. In the auto insurance world, the risk is all based on human interaction. Twenty years from now, when almost all of the control related to the safety of a car will be done by the car itself, there are predictions that it’s possible car insurance will either go away or dramatically shift.
You would think that most DUIs and drunk drivers would go away. There’s definitely a big implication all the way around.
Matt, you got this business started. You went to raise money, the economy crashed, dealers started pulling back, what did you do next?
We kept working. We had a bunch of problems with partners and we got sued by one after we had to let him go, and we had a bunch of issues. There was a time where we sat around everyday wondering what in the world we’re going to do next because we had all this stuff hanging over our head, but we kept improving the product and kept going. The collapse of the economy helped us. All of a sudden, we were calling and telling these people that we had a better way to do things and we can save them money. That message struck home with them and they were calling us back. Our business shot up and we were growing. Because we were a SaaS company, we sold our product like $1,000 to $2,000 a month. It was all recurring revenue and that was increasing by $200,000 a month.
It was like huge clips month over month growth and you can’t plan for that. You can’t budget for it. We had all sorts of crazy operational business problems and we had no capital. We were bootstrapped the whole way, so we were making money, but we were spending every dollar that came in. We ran into issues like we need more support people. We needed to hire those support people probably six months ago so that they can understand what we did to even support our product today.
We were always behind the eight-ball on everything, but we were growing. People always say they want to have that problem. They’re like, “I’d love to have more customers than I know what to do with,” but the last thing you want is 50 salespeople that aren’t selling anything because they’re taking calls from people that already sold that are complaining about how we haven’t delivered the product to them yet because we’re in such a backlog of trying to get it installed and delivered. Talk about some mad employees. It was a difficult place to be, but we were there.
When I built Timeslips Corporation, we sold a ton of software almost suddenly through retail because of the reviewer. A reviewer rated our software the highest any software has ever been rated and that resulted in three distributors picking up our product line and dropping it into 1,500 stores. We went from sales of about $12,000 or $13,000 a month upwards to $200,000 a month steady, and then finally to four and then eventually to eight and higher. We were outstripping the ability of our tech support department to handle incoming calls because at the time, there was no internet. Here’s the solution we took, and it was a shot in the dark and it almost killed us.
We built a certification program and we reached out to our very best clients and offered them a chance to start a new company based on supporting our customers. It was like a biz op. This became so successful that the team grew to 350 people. Because of the team, it doubled the value of our company, it reduced our support expenses by 20%, and they became our third largest sales channel. To this day, this is what I do for clients. I set up these types of certification programs. It’s a terrible place to be because even if you had the money, you need to have solved this six months prior to that increase in traffic and you just can’t do that. You obviously got that under control as painful as it was. What happened next?
At the end of 2010, we went to go raise around a funding and at that time, we were doing fantastic. We were that company that couldn’t even get a line of credit from the bank, and eventually we turned a corner and we were doing $1 million a month in profit. Then we could get money from the bank and we didn’t need it. We decided to try and raise a round of capital, so some of the current owners could take some of the money off the table and invest big time into the company to go buy a much bigger data center and all the hardware and the different stuff that we needed to take to the next level. We got an offer that valued it about twice what we thought it was worth and we couldn’t say no, so we ended up selling the company.
They say that every entrepreneur’s dream is to get to that point in their lives when someone comes along and makes that godfather offer that they can’t refuse. It happened to me. It happens to people who are willing to persevere and do whatever it takes to build a great company. In this case, that’s you, and at that time, it was me. I’ve been there. I know what you went through. It’s a great feeling on that day, but it doesn’t always end up to be a great thing. Did you go to work for the acquiring company?
We finished the agreement in May and we had an earnout through the end of the year. We got until November or December, it was after Thanksgiving. Me and another gentleman at this time ran the company. I was in charge of product development. I helped write code, do all that side, and the other guy was the CEO and was in charge of sales. I sat down with him and I said, “What is the story? Our earnout is over. If we sign up a new customer, it doesn’t even matter anymore, that’s going to roll into the next year. If somebody cancels, it’s not going to hurt our numbers. That’s going to roll on to the next year.
What’s our employment agreements? What are they going to pay us? What are we going to do?” At the time, I had an idea about starting my existing company and I told him, “What’s the deal? I’m thinking about doing something else.” He’s like, “They abolished slavery a long time ago. If you don’t want to be here, they don’t want you to be here. They don’t want you running around like a zombie all day either. They know you’re 29 years old. They’re going to hand you a bucket full of cash. They almost don’t expect you to stay.” I’m like “Perfect. I’m out of here.” I started Stackify literally January 1st and started doing what I’m doing today.
Tell us what Stackify is.
It’s a service for other software developers. We have customers in over 50 countries that use our product. If somebody has a small development team or even a big development team, if they’re pushing updates to their software every week, odds are, those cause problems. They’re trying to fix bugs and improve the performance of their applications, but more often than not, they break things along the way. They need tools like ours to know when that happens, to troubleshoot those problems, monitor their applications, sleep at night, knowing that we’ve got an eye on everything for them. We provide the tools that the developers need to do all those things.
You created a tool set for developers to better deploy their releases in a more controlled way. Would you put it that way?
We help them find the bugs and problems in their apps before they do the deployment, while they’re doing the deployments, and after they’re doing the deployment. They can improve things and verify that everything works the way that they’re expecting.
You did this because you felt as if there was nobody else out there doing anything near what you’re talking about. Is that right?
There really wasn’t. The problem is traditionally, in most companies, the developers write all the code and then they throw it over the wall and then IT, operations, system administrators will monitor it and manage it. Then if any problem happens, you get a lot of finger-pointing between those two. We wanted to create a set of tools that will get everybody on the same page about how the applications are performing. If they have errors, how many people are using them? If they’re fast, if they’re slow, all this type of stuff. What we’ve seen is because of the Cloud and everybody deploys their software to AWS and Microsoft Azure, the developers do everything these days. The concept of IT operations is going away, especially in smaller teams. Our software perfectly helps those people.
It sounds like a great proposition if you’re in a position to launch or run a software company.
We’ve got several hundred of them all over the world. What’s amazing to me is everybody has software, everybody uses software. We have companies that are airlines or cruises. We have companies like Carbonite who do online backup. We’ve got Staples as a customer. That’s one of the cool things about our business is seeing who our customers are that are all over the world in these random places and random industries.
I’d like to shift gears if I can to SEO and content marketing. You mentioned that this is a big area of expertise for you. Why don’t you get into it a little bit and tell us what you do and what best practices might be for people who are in the middle of building a content marketing repository called the blog post or a website?
I started doing a little bit of this stuff about fifteen years ago in the early days of VinSolutions, and always would write industry blogs, and we’ll do SEO for a website. I also manage our paid Ad Words. For VinSolutions, it was easy for us to call a car dealership and say, “Who sells cars? I want to talk to the person,” and say, “Can I get fifteen minutes of your time to do a demo for you and show you there’s a better way?” That was pretty easy to do. In my existing company, our customers are software developers. They don’t even have phones, or they definitely don’t talk to people on the phone.
They also are usually pretty finicky people about ads and spam, the most likely people who use ad blockers. They’re very difficult to reach in any advertising. We’ve had very little success with it. There’s one thing that is absolutely true about our audience. It’s true about most companies. If they have a problem, they go to Google and they search for it. Our goal is to try and answer those questions that they’re asking Google. If they search for application blogging best practices, we want to show up in the first page of Google. We want to answer those questions.
How do you get to be on the first page of Google?
There’re a lot of different pieces to that, but the best advice I have is I look at anytime somebody types something into Google. They’re asking a question, and if you can answer that question better than anybody else in the world who has posted content on Google, odds are you’re going to show up on the first page of Google and may rank number one.
Something I heard that was very interesting is that every single day, 50% or more of the searches typed into Google have never been typed in before. If all these people are typing in new searches, how do you know what they’re going to type?
You don’t know. I thought I’ve read before about 70% of all searches are what they call long tail. They are long questions or sentences, have three, four, five or more words. That’s why they say to optimize for those. For somebody like us, it might be like, “How do I find which sequel queries my code?” We do a mixture of different types of content marketing. We publish a new blog post five days a week, Monday through Friday, and some of them are very product or market-focused. Somebody searches for something like application performance monitoring for example, that’s like a home run for us. They’re looking for our type of product.
We also create a lot of content for things that are the next level removed. It’s like they’re searching for application blogging best practices, so they’re not necessarily looking for our product, but they are looking for something that’s tightly related that we could probably steer them into our product. Then the next step out is people that are the right persona. Maybe it’s an article about software development trends, so if they are a developer, this content helps with branding and awareness. It’s the type of content we can use to get a lot of inbound links to us because it’s popular content, so we try and create a mixture of all those things.
Do you go out and solicit inbound links?
We do a little bit, but we decided to double down on this. We’ve grown our web traffic from about 40,000 people a month to about 500,000 a month. What’s amazing about that is the consistent blogging we do and the quality we put into it. People just seem to find us. It’s not uncommon at all for big companies to do weekly roundups of what’s going on in the community or those types of things that they do where they’ll mention articles from us. I’m talking about companies like Microsoft, IBM and JetBrains, which is a big company in our industry. It’s cool when these random companies pick up and link to our articles.
How can our listeners get that same effect with the type of content that they’re posting?
They’ve got to be consistent. Look at it like when somebody searches something on Google, that they’re asking a question and you’ve got to figure out how to answer that question very thoroughly and better than anybody else. One of the struggles with blogging and content marketing is making sure that you’re not trying to answer ten questions in the same article. You’re trying to go real deep and answer that specific thing that somebody searches for. It’s a mixture of quality and quantity and you got to keep doing it.
Another guest mentioned the importance of cultivating powerful link backs from credible sources. Is that something you let happen naturally or is that something that you go out and pursue?
We do a mixture of both. We get a lot of community links naturally. There are services out there that you can use to do guest posting and get links that way. There’s a whole bunch of companies who do promotional guest posts, like Fat Joe and OutreachMama. There’s all these different companies that do this stuff where you tell them what keywords on links you’re looking for. They’ll help get you placed and promoted on all sorts of different blogs. There’s a ton of companies that do that type of stuff. If you Google paid guest posting, there’s a ton of companies that do that. We do some more natural guest posting too, so we might work with a reciprocal partner. For example, Axosoft as a company in our industry, and we did a little integration with them, so it’s like, “We’ll write a blog post and put it on your blog. You write a blog post and put it on our blog.” We’re doing that stuff too.
That’s a great way to get those very valuable back links from credible sources. Let’s talk a little bit about building a company. You had the advantage the second time through with your current company of being well-financed, but let’s go back and start with lessons on how people can best structure the company that would be ready to grow. What do you look for? What do you set up in advance? What should you be thinking about before you grow that you will need later as you grow?
If you’re talking about the employee side of it, it’s having the right employees that can work at a startup. I understand that mentality, which is a completely different thing than working in a big corporation. The other part of it is always the go-to-market strategy. That’s something that we struggled with here at Stackify. We think we’ll build some awesome product, and if we build it, they will come. It just does not happen that way. For a lot of people, when you’re first starting a company, building the product is the easiest part.
It’s easy to open a restaurant and open the door and say, “Anybody come in,” but how does somebody know that your restaurant exists? Or in this case, that your software company exists? You got to figure out who your customer is, what type of customer you’re optimizing for, how you reach those people, how you message them, and how they know you exist. All of that is 100 times harder than building the product.
How do you do it?
A lot of trial and error, a lot of hard work. We did a lot of paid advertising that didn’t work very well, but the content marketing does. We decided to double down on the content marketing, the blogging that we do, driving traffic that way, and don’t do any paid advertising.
A very difficult decision to make because paid advertising is a little bit like a needle full of heroin. You think to yourself, “I just got to pop the needle and press the plunger and I’m there.” It’s not that way at all. It’s a slow slog using content marketing to start building that very avid audience that is a fan of what you do. What about from the side of scaling in terms of employees? Did you start this company with just yourself or with some number of people in advance?
When I started Stackify, I was the sole founder. I immediately hired three contractors that were software developers and started writing the code. It took us over two years to get the first version of the product finished where we could start selling it, but then it took us another year of refinement of the product to get it where it needed to be. I don’t think most people ever think about how hard it is to build a software product and the amount of time, energy, and money that it takes.
I think the expectation is, “Finally, it’s done. Now I can release it and start making money.” We all know that the harsh truth about the answer to that question is “No, it doesn’t quite work that way.”
It depends a lot if you’re trying to sell your product to a large enterprise or to smaller companies. If you’re trying to sell your product to a large enterprise, odds are, your product is probably more complicated. The sales cycle is going to take six to twelve months and that further delays your ability to sell the product and it’s a challenge.
Is the objective, in your case, to look for corporate customers or are you looking for customers at the small business level?
Most of our customers are small and medium-sized companies. They do less than $250 million a year in revenue. A lot of it are small dev teams. I have one to five software developers. It’s our sweet spot.
You’ve carved out a market. You know what your market is. You avidly address that market with content marketing. You probably attend some events and you speak at events and do trade shows if they’re the right fit for you. Am I right about that?
We don’t do a lot of trade shows. We do some regional ones, but like most people, trade shows don’t work very well. It seems like in some industries, everything relies on a trade show, but for us they’re not. They don’t work very well.
For us, they were fantastic. We would go to Legal Tech Trade Shows back in the day of building my Timeslips Company. We might be the smallest, ugliest booth in the room, but we were clearly the busiest, so it used to work great for us. We were in the room with some of the largest legal software companies in the world and we are at the back of the room with a folding table and a white towel draped over the table. We would sell software on the floor and we’d walk out of there with sometimes as much as six figures. For us, trade shows were everything, we love them.
At VinSolutions, the trade shows for car dealers worked very well. There were three a year that were critical to us and they were huge because every industry is different.
There’s something that will work in your field, whether it’s speaking from stage or it’s trade shows. Find what that is, pursue it, and try to get a presence in those environments. One of the things that I used to do with my certified consultants is we would set up speaking events for them. What we would do is we’d have a PR person in-house who would call each city and find out who the Bar Association person was who set up guests, and then when we could book one of our local certified consultants into the local Bar Association. We know that they’re going to be standing up in front of 20, 30, 40, or 100 lawyers talking about our product. I’m sure in every business there is a trade association where you could do the same thing. Have you ever tried anything like that?
No, I haven’t.
Nowadays, there’re Meetups. You could start Meetups that are aligned with your core message and you could bring people in. I know one company that has a series of Meetups all over the country and they bring in twenty to 50 people. They offer free log-ins to their system, so people can use them. There’re so many ways to market products that don’t require that you spend a lot of money.
One of the things that we decided to build a couple of years ago was a free tool. It’s called Prefix. We took one little feature out of our core paid product and made a free tool out of it that developers could use on their workstation while they’re writing and testing their code. We’ve now had 20,000 people download that free tool, and we did very little advertising to get that to happen. That was a huge lead generator for us and it has a big network organic growth. Those types of tools can be another great way to do marketing.
To our audience, if you can do something similar to that. It’s like a lead magnet, but in this case it’s very specific, which is perfect for your market. If people wanted to get an idea of who you are and what you do as a company, where could they go on the web to find you?
If they go to Stackify.com, is there a tool that they could download for free?
Our Prefix, which is our free tool, is on there. Our core product is called Retrace and we offer a free trial of that if anybody wants to try it out.
Matt, I got a couple of questions for you. These are questions that I think will help our listeners get to know a little bit more about you. Who, in all of space and time, would you like to have one hour to enjoy a walk in the park, a quick lunch, or an intense conversation with?
I’ve been thinking about how to answer this question and the only answer I can come up with has got to be Elon Musk. I’m sure everybody says that though, so I feel bad.
Everybody has a different reason why. Tell me why you would like me to set you up with a meeting and lunch with Elon?
Partly because I’m a huge Tesla fan and I’ve owned a Tesla since they first came out. He is a brilliant mind. I don’t think a lot of people these days remember that he also created PayPal, and before that he worked on MapQuest and has done a lot of cool stuff as an engineer. He’s definitely an icon of our time.
Is there a particular question you’d like to ask him?
“How he does all these things at one time” would be a great question.
Here’s the grand finale question, Matt. It’s to change the world question. What is it that you are doing, or would like to do that truly has the potential to literally change the world?
I’d like to say if I can help other developers make their applications work, then we can make all of our lives easier and better as we’re using our phones all day and the internet all day. If it worked, would that change the world?
I think it would change a good section of the world, a nice little corner of the world. How’s that?
I don’t know about you, but every day, you’re on the internet and you search for something, you click on some site and it doesn’t load very well or it gets errors. You want to start throwing your computer and cussing, at least I do sometimes and my goal is to help solve some of those problems.
I think that’s a great mission and I know that a lot of people are aligned on wishing their software was a little bit smoother when it works. Matt Watson, you’ve been a pleasure to have this conversation with. I appreciate your openness and sharing of your wisdom and skills. I loved hearing your story. Thank you for being on the show, Matt.
Thank you so much for having me.
My pleasure and I look forward to our next conversation.
Resources Mentioned in This Episode:
- Matt Watson
- Fat Joe
- Matt Watson’s LinkedIn
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