How Moz Built A $35M Company Without A Single Salesperson
Rand Fishkin on growing a SaaS business, battling depression and building an amazing company culture.
There aren’t many SaaS companies with a Wizard on their payroll.
But Moz, the marketing software company co-founded by Rand Fishkin – the official “Wizard of Moz” – is a bit different.
The Wizard’s job, as Rand describes is, is to “conjure up some eye of newt every day, mix and then mix that in your big black bowl, serve it to everyone and give them magical powers so they can make great software for marketers.”
Other, less fantastical duties of the job include sitting on Moz’s board of directors, acting as the Product Architect for Moz’s Research Tools, and being available wherever needed throughout the company to give feedback and guidance.
Fortunately for us, another responsibility of the Wizard of Moz is to do interviews.
We talked to Rand about his journey as an entrepreneur, how he grew Moz from nothing to more than $35M in annual revenue, and the struggles – both internal and external – that he’s had to overcome along the way.
Starting Out, and Knowing Nothing
When Rand and his co-founder (and mom) Gillian Muessig founded Moz in 2004, they didn’t know a whole lot about running a business.
You know, we just had no savviness at all about how to build revenue, how to get customers, keep them, how to maintain a financial model that had any hope of succeeding…
We were just truly rank amateurs at this stuff.
When we first got an email from Michelle Goldberg (of Ignition Partners, who ended up investing in Moz in 2007), I didn’t even know what a venture capitalist was. Had to look it up.
“What is venture capital? Oh weird. Does that mean they like take over your company or something?”
We didn’t know what churn rate was when we launched our software. I didn’t know what MRR stood for. I didn’t really understand the concept of recurring revenue.
All I knew was well, it cost us this much to maintain our tools, so we’d better get people paying us every month instead of a one time download, because it costs us money to keep it up. I had the most simplistic of thinking that you can imagine from a business perspective.
In the context of Moz’s later success, Rand’s story might seem like a reason to throw caution to the wind and jump into a startup, expecting to learn everything along the way, Rand cautions against following in his footsteps.
Don’t do that. Learn. There are so many resources, plenty of communities, plenty of great books on the scene that you can learn from. There’s tons of tremendous content out there about how to build a great startup these days [Ed. Note: much of that tremendous content comes from Rand’s own blog at moz.com/rand].
I hope entrepreneurs invest in their education before they make all the dumb mistakes we did.
How does Rand recommend investing in education?
Depending on what kind of business you’re pursuing, it could make sense to join an accelerator program. There are a lot of different kinds. There are some that are primarily geared toward education and learning, there are some programs that are geared towards investment, there are some that really help you find investors and grow your model.
There are some that help you with mentorship a lot. I think that pursuing one of those programs could make sense. There are also a lot of programs now in colleges. Just last week I spoke at Startup UW, which is a program at University of Washington’s business school. It was super cool; it was all of these undergraduate kids thinking about entrepreneurship, and they’re part of this group listening to entrepreneurs like myself and many other successful ones around Seattle who come in and do guest lectures and talk about their experiences and answer questions. I wish that I could’ve done something like that when I was in school.
Rand’s affinity for mentorship isn’t without reason; mentors have played a huge role in his own development, and he’s had some great ones. Among Rand’s mentors, he counts brilliant industry players like Danny Sullivan of Search Engine Land, Dharmesh Shah of HubSpot (with whom Rand later co-founded Inbound.org) and Brad Feld of Foundry Group.
For me it’s been really wonderful to get to have these people over the years who are in my life that I can observe. They’ve been through the pain and the process that I’m going through that they’re a few years – or many years – ahead of where I am and where Moz is today, and there’s a lot I can learn from those experiences, and hopefully take away some of the painful lessons ahead.
Of course, most first-time entrepreneurs don’t have access to a rolodex with names like those of Rand’s mentors.
But then again, when Rand started out, neither did he.
Still, he says, anyone can find great mentors if they approach it the right way:
I think part of it is when you help people yourself, you will find that those relationships materialize.
It’s not that dissimilar to dating. You’ll probably have very poor luck if you walk up to someone and say, “hey, we’ve never met before but I think we should go on a date.”
You’d be like “uh, who are you? Get away from me, I don’t know you.”
I see that a lot in the entrepreneurial space, where I’ll get a cold email from someone I’ve never met before, and they say “hey would you mentor me?”
Unfortunately, I don’t have the bandwidth and probably couldn’t say yes to one or two more beyond the people that I already talk to and try to help, so that’s not a great way to go about it.
I think the relationship that Dharmesh and I built came about very organically.
It was like, “hey, I’m a fan of what Hubspot is doing, they’ve been looking at Moz’s stuff for a long time, we’re sort of in the same space but doing different things, and I happened to be in Boston and Dharmesh was like, “hey, let’s go to dinner.”
So you know, that started a relationship and one that’s been really wonderful in my life and hopefully in his too.
With Brad Feld it was complete serendipity. We had a really awful experience of having an investor pull out on a term sheet in 2011 and I wrote a blog post about that. Brad found that post because his wife, Amy, is a subscriber to my wife Geraldine’s blog, The Everywhereist. Amy saw a link to this other article that I had written and she passed that onto Brad. Brad wrote a post about it and emailed me. I connected with him when he was here for TechStars Seattle, and talked to him on the phone a few months later when we were trying to raise money again. So, it’s been very serendipitous, a lot like dating, the connection has to be really natural.
The Hardest (And Easiest) Parts of Being an Entrepreneur
There’s no question that entrepreneurship is a tough gig. But everyone experiences it differently based on their own strengths and weaknesses.
For Rand, the easy part is “coming up with ideas, helping people, earning trust and awareness and interest has always come very naturally for me.”
The hard part?
Managing people. Now, I don’t mean that I mind having people report to me, but I tremendously mind and really struggle with the management portion of it.
If we’re working together and you’re my direct report, the way that I want us to interact is, “Hey, what’s going on in your life? What’s going on with work? How can I help? Everything cool? What are you planning to do the next few weeks? What’s derailing you? How can I help fix it?”
What I hate is trying to solve a conflict or a problem between people, or micromanaging, being like, “you didn’t get this thing done that you said you were going to get done last week, I really need you to do that.”
I would say I maybe can be a good mentor or career counselor for only a very certain type of person. I can’t really help people that need more hands-on direct management, like “help teach me the skills of how to perform well in a business setting”.
I don’t even know what a business setting is. To me, we’re all living in life, which is a setting, and if your corporate business construct is different than how you interact with each other in the rest of your life, then I think you’ve lost authenticity and that’s a terrible thing. I hope to never work at that company.
So I work well with certain people and more poorly with others. I wouldn’t consider myself a great manager and that’s something I struggle with.
Another thing that Rand can’t stand, which many might see as being at odds with the role of an entrepreneur, is selling.
“I hate to sell. You can’t pay me to talk about Moz’s products… and they do pay me.”
Despite that, Rand and his team have pulled off something amazing: building a base of more than 25,000 paying customers, all without a single salesperson.
How to Get Customers if You Hate to Sell
While Rand hated selling, he knew he’d need to do something to get customers to pay for Moz’s products.
He found the answer in giving away Moz… for free.
Moz is free to try. If you’re interested in tracking the kind of data that we track, scoring links, getting alerts or mentions, all these kinds of things… if you want to do these things, well, Moz is free for 30 days, so it makes sense to try it, right?
I think that philosophy has worked really well for us and I think it’s worked really well for a lot of companies.
One of the players in the SaaS market that I admire most of all is Survey Monkey, and they’ve built this multi-billion dollar business with basically no sales at all. It’s just, go try Survey Monkey, there’s a free account. As you find surveys more valuable and useful, great, you can scale up, just pay us $20 a month, or $50, $100. So that’s one of things I’ve been really passionate about at Moz, is that you can have a free account with us.
You can use our stuff for free for years and, that’s great with me. If we’re providing value, I’ve done my job.
I don’t actually personally care if you pay us or not. I care if we’re helping.
Through this philosophy, Moz has helped many thousands of marketers, and they’ve been repaid handsomely for it.
Moz’s average annual revenue per user is over $1300, with an average customer acquisition cost of less than $100.
Still, even without a laser focus on revenue, Rand and his team do find goals to be incredibly important.
Specifically, big, hairy, audacious goals (BHAG’s, as Rand calls them).
My favorite example is the moon mission. It had this super clear big hairy audacious goal: put a man on the surface of the moon, and return him safely to the earth.
The guy steps on the moon and comes back okay. All right, then we did our job, right?
That’s super measurable, and then you have all these things, like, strategically, what do we need to do? Well, we’re going to need a ship. Ok, now we’re going to figure out fuel and an environment for him to survive in, and some sort of suit that he can walk around and then you have all the tactics, like all right, you make the boot.
I think that model works really well: set one big hairy audacious goal, and then all of your short term goals and tactics fall from that. It scales nicely, too.
Rand’s Battle With Depression
Last year, Rand published a blog post that was important to – and deeply appreciated by – many in the startup community.
In it, he shared his difficult struggles with depression, a disease that affects many, but that few talk about.
Rand’s depression led him to view everything around him in a negative light; in his eyes, nothing with Moz was going right (this was exacerbated by Moz losing $6m in 2013; while the company had planned to post a loss because of investments they were making, it was a bigger loss than they had anticipated).
Things sucked, and he couldn’t be convinced otherwise.
When I was depressed, I really did not feel better after spending time with my friends and coworkers who were just like, “everything’s fine, Rand, look at these amazing thing you built. What are you complaining about? It’s going so well, so you had one misstep, it’s going to turn itself around. It’s not like you’re bleeding money, you didn’t have to fire anybody. What’s your problem, Rand?
I hated that. HATED it. It just bugged the shit out of me.
I’m having a visceral reaction just remembering that now.
But the thing that helped the most was hanging out with friends and folks who either had depression before, or understood that anxiety and could commiserate. Folks that could be like, “yeah man, this is complete shit. I can’t believe we fucked this up, you fucked this up, it’s gotta get better, we’ve gotta improve it, we need to work on this, this is just terrible and I understand how badly you feel.”
Honestly that was way more helpful, way more comforting than “everything will be all right.”
Ben Ha (of The Cheezburger Network) has written openly about the depression he’s been through. He wrote about a suicide attempt that he had when he was in college, he’s a guy who really struggled with this stuff.
I really liked spending time with him. I like spending time with him now, too, but it was just great to have that feeling of not being alone. Of not feeling like “the rest of you are crazy, why can’t you see this terrible thing for what it is?”
In Rand’s post, he reported on the moment when his depression finally began to fade:
The moment of change happened after a doctor’s visit, in a very weird, inexplicable way. A few months prior to the doctor’s visit, I had tried a chocolate truffle laced with THC (don’t panic, personal Marijuana use is legal in Washington State). I’ve had sciatica in my left leg for years and if you’ve hung out with me, you’ve probably seen me stand up uncomfortably or use a scarf or sweater as lumbar support to sit down. For 6 hours after I tried the pot truffle, I felt horrible – crazy paranoid and high and awful. Then, for the next 3 days, my leg didn’t hurt at all. For the first time in six years. I told my doctor about this, and she said “the funny thing is, Marijuana doesn’t have any pain-killing properties. It just lessens tension, anxiety, and stress for some people.”
Bam. Moment of epiphany. My pain is tied to anxiety and stress (probably) and since I’m not particularly excited about trying pot truffles again after those first 6 hours of hell, I need to work on those things in order to fix my leg. And not just my leg. There’s likely all sorts of maladies, mental and physical, that I might suffer in years ahead if I can’t get this under control. That night, I felt different. I looked at our daily numbers email in the morning, and I didn’t come up with some reason in my head why they were bad even though they looked good. Like the corn in Hyperbole & a Half’s famous comic, suddenly everything wasn’t hopeless bullshit.
On Building an Open and Fun Culture
Rand’s openness with his depression doesn’t make him unique at Moz; in fact, their culture is one where many feel comfortable talking about topics that in many places are taboo.
Moz hosts regular “Lunch and Learn” sessions where employees share lessons and experiences with each other.
The topics often have nothing to do with work, and Rand welcomes that:
I love creating an environment where people feel safe and comfortable enough to share things
At Moz, there’s a woman I work with on the product team, and she’s absolutely one of my favorite engineers. She’s a transgender woman and during one of our Lunch and Learns, she went up and she shared a Powerpoint presentation explaining her gender reassignment surgery, and the process, and what happens and all this stuff. And that was one of my best days at Moz, because I felt like “wow, if she feels comfortable enough with all of us to share that kind of thing, and if this is the kind of company where everybody goes and eats their lunch and learns about gender reassignment surgery, then I want to live in that world.”
I am so glad that I have that company. That was a great day.
Culture building is a challenge for every company, especially when you have no cash to spend on it early on.
Long before Moz’ perks includes employee trips and outings, Rand worked hard to foster a fun culture in ways that didn’t cost the company much:
We found things that we just enjoyed doing together that didn’t have high costs associated with them.
The way we ran meetings. The way we did planning. The way we sent each other emails and the way we did internal communication.
A lot of culture is the user experience of the company itself.
Everything from what machines we work on and what kind of desks we get and what our office environment is like; you don’t have to spend that much money to make that enjoyable.
For example, we just said: you know what? We’re going to make it so that our expense reports are just crazy easy… actually, screw that. Since there are only five of us here, we’re going to have the person who takes care of our finances do everyone’s expense reports, so we just don’t have to worry about that.
Small things like that are a great way to not necessarily spend more money, but make people feel better about their experience at the company.
Moz had no money for forever. From 2001-2006, there were at least four months where I didn’t take a full paycheck, or didn’t take a paycheck at all. And my paychecks at the time were only $750 every 2 weeks.
We still had fun. Matt and I would stay late in the office and play CounterStrike on a server we set up, or we’d hang out after work together and watch TV at my house.
You can build an enjoyable environment without much money.
Rand on Turning a Corner (And His First Big Splurge)
When Rand could finally pay himself a salary, he set it at $34,000. That lasted for several years until the company raised venture funding and was able to give the team raises.
My salary jumped to $120,000 a year overnight, and I remember this experience so vividly because I got my first paycheck after the deal closed, and I was like, “holy shit this is insane.”
I don’t get to choose my salary; the board of directors basically set the salary for the first year, so they had their comps of what startup CEO’s make of companies of various sizes, and they sit it at $120,000.
This is the point in the story where many founders go out and lease a car or a new home.
I remember after getting the check, I went to this fancy kitchen store. Before this, Geraldine and I had the world’s shittiest pots and pans, but I bought this one beautiful copper bottom pan, and I think it was like $225. It was way more money than I’ve ever spent on kitchen equipment before, but I still have it and we still cook in it all the time. I love that thing and I think about that experience every time I bring it out.
How Rand Stays Productive
With a job description like Rand’s, time isn’t easy to come by.
He manages his schedule with rigid focus:
One thing that really helps me is keeping all my communication and obligations through two channels: email and calendar.
I have everything go through my email or my calendar so if there’s nothing on my calendar and I’m at inbox zero, I have nothing to do and I can do whatever I want. But if there’s anything in my inbox or something in my calendar, then I have to do the thing on my calendar until it’s done and then I have to go take care of my email until that’s done, but that means that I never have to worry about anything else.
I don’t answer text messages, and if you leave me a voicemail, I’ll never reply to it. I looked on Facebook and I have like 700 messages I’ll never read. I don’t respond to all the crazy messages on LinkedIn.
If it comes through my email, I’ll take care of it. If not, it doesn’t exist.
Rand’s Required Reading
As with every $100K interview, we asked Rand for his required reading for all entrepreneurs. Here’s what he shared:
Your Turn: Ask Rand Anything
Have questions for Rand? Post them in the comments below!
We’re going to be watching closely and trying to learn as much as we can ourselves, so don’t be shy.