GE 294: Why Moz Founder Rand Fishkin Stepped Down from a $50M Biz to Start His Own Software Company (podcast)

Eric

6 years ago

Hey everyone! In today’s episode, I share the mic with Rand Fishkin, the Co-Founder of SparkToro, a service that helps you find all the proper outlets through which to reach your target demographic. This is his second time being a guest on Growth Everywhere! Check out the first episode with him here!

Tune in to hear Rand talk about why the “Wizard of Moz” decided to leave Moz, how he helped grow the company 50% YoY, how he started his own software company a month later, and why the venture model may not work for every company.

Time-Stamped Show Notes:

[00:58] Before we jump into today’s interview, please rate, review, and subscribe to the Growth Everywhere Podcast!
[02:11] Rand started Moz as a blog, then it became a consultancy, which then turned into the current iteration we know today.
[02:31] Moz now makes $50 Million annually.
[02:44] Rand left in February of last year and started SparkToro on March 1st.
[03:15] SparkToro did a unique round of Angel Investing, where investors participate in profit sharing.
[03:35] Rand thinks VCs are fine, but there are better ways for 99% of companies out there.
[04:00] Rand recently got involved in a non-profit, Event Safe. Event Safe’s goal is to make events safe for everyone, but women in particular.
[06:05] The Venture model works well when you have a million dollar company.
[07:15] Institutional investors are not great for many start-ups.
[08:50] Even when you are profitable, you can’t take the extra profit for yourself. The more of the company you own, the less you get paid.
[09:35] Founders need to remember they may not be liquid.
[10:02] As CEO, Rand felt more in control of his destiny.
[10:15] It was stressful, but came with a great deal of freedom.
[10:25] When he was CEO of Moz, they grew at least 50% year over year.
[11:40] Rand called himself “The Wizard of Moz”.
[13:15] When Rand stepped down from Moz, the growth rate was already slowing down.
[16:03] Most Angel deals in tech are designed to eventually convert or be successful by virtue of a successful venture round.
[16:40] Investors are looking for companies reaching for hyper-growth.
[17:45] SparkToro wanted to be a lower-risk company.
[18:20] They didn’t want to limit themselves to only making money for investors.
[20:06] To set up SparkToro’s business model, they worked with an innovative attorney who works with start-up’s.
[21:36] Rand and his partner own 78% of SparkToro, so they have great incentive for the company to do well.
[22:08] Once they pay back investors, they can participate in profit sharing, as well.
[22:25] Rand and his partner capped their salaries at the average for a software engineer and cannot raise their salaries until they’ve paid investors back.
[22:52] SparkToro was created because Rand realized that people had trouble targeting their audiences.
[23:33] Social media ads weren’t doing the trick.
[24:30] It’s hard to figure out where your target audience is spending their time online or which podcasts they like.
[24:55] Rand realized that this was silly and there should be software to help people find the right blogs, events, podcasts, etc.
[25:40] You can type “Digital Marketing” into SparkToro and it will find the appropriate outlets to target.
[26:30] SparkToro offers two kinds of pricing: One-time and subscription.
[27:44] Rand found building SparkToro easier to build after his experiences working at Moz.
[28:45] Rand’s book was a labor of love and not financially motivated.
[29:08] He wrote the book because he believes he can help people.
[32:15] Rand works 2-3 events per month on top of everything else.
[32:33] He wants to be where his customers are.
[34:00] 18 Months ago, Rand was at a conference. He met a woman who hung out with conference attendees from another event and one guy attempted to assault her. He was a speaker at the conference and alerted event organizers.
[34:58] Event organizers said they would deal with it, but they invited the guy back to be a keynote speaker the following year.
[35:18] This was one of the many inspirations for Event Safe.
[35:55] It took a direct threat for the event organizers to fire the keynote speaker/attempted rapist.
[36:33] Many women expressed how common something like this is at conferences and events.
[39:10] Event Safe isn’t about profit, it’s about doing the right thing.
[40:15] Rand recommends the books Sprint, Powerful, and Radical Candor.

Resources from the interview:

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