Building a VC-backed Company to $30 Million/Year With Rand Fishkin @ Moz

Rand Fishkin is not just the most prolific SEO of all time but a lot of things. He is a 2x founder, 2x author, a marketer, an investor, a college dropout, a GOAT husband, and an Oprah Winfrey guest.

He built a VC-backed company to $30m/year before stepping down as CEO. Then he went on to bootstrap SparkToro to 1,000+ paying customers.

Rand’s book, Lost & Founder is one of the best books for startup founders.

In this AMA, Rand talks about everything but SEO.

Building a VC-Backed Company To $30m/Year

Q: In your book Lost & Founder, you had some very specific opinions on the impact of VC funding on founders & the company they’re building. You’re also an investor. Can you expand on how to hold what appears to be two conflicting opinions?

A: No conflict there. We invest in non-venture deals (i.e. indie startups and indie-style funds like TinySeed). We (Geraldine and I) really don’t like VC as an asset class, even though we have friends who are VCs (we’ll keep trying to convince them to pursue other ways of funding startups)

Q: You’ve found both a VC-backed company and a bootstrapped company. I’m pretty sure if I asked *which would you prefer*, I know which answer you’ll choose. But how do you think you would feel on this question if you hadn’t raised a ton of money building Moz?

Would there be some lingering doubt in the back of your mind that bootstrapped really is the better way, without going through the VC experience?

A: ABSOLUTELY. That’s why in Lost & Founder I talked about how I’m glad I raised that first round and would do it again. I think I’d always look back and wonder if I was cutting myself short or if I wasn’t “good enough to play with the big kids” had I never taken VC.

Q: What kinds of projects do you invest in?

A: Personally, Geraldine DeRuiter and I invest in non-VC, indie-style startups (especially those with diverse founding teams, i.e. not just white and Asian dudes from the US coasts). But we don’t do very much. We’re limited to ~1 per calendar year because we just don’t have that much capital.

Q: Do you have an opinion on why Seattle is lagging behind other regions when it comes to producing new, globally / industry dominate tech companies? Same question on angel investment & VC funding. There are so many devs & AMZ/MSFT millionaires, but we lag behind a lot of other regions.

A: I don’t want that. I’d really rather see fewer Amazons, Microsofts, Starbucks, Boeing, and more small and medium businesses who don’t have outsized power and undue influence over the city and its citizens/government.

I think Seattle is doing “better” than you think on all those vectors when controlled for population size. Remember that we’re 1/5th the size of the Bay Area, 1/20th the size of LA county or greater NYC.

If we did want more of those things, we’d need a culture of local investment, and social pressure/focus on VC-style entrepreneurship. I don’t think we should want either, but that’s likely the way to get more.

Q: What are the things you’re doing differently with purpose this time around? Bootstrapped, but what does that look like in real life?

A: SparkToro is:

• Funded differently (angels > VCs)
• Tiny (team of 3 vs. team of 200+)
• Results-focused, not quantity-of-hours focused (i.e. “Chill Work”)
• All remote vs. central office
• Few features, all laser-focused on solving a single problem (Audience Research)
• Profitability-focused vs. Growth-focused

Q: Agency bootstrapping a SaaS product that is very integrated into the Agency’s delivery. Considering a capital raise, is it reasonable to consider asking investors to invest into the combined entity (so they get a piece of agency and saas), or is it best to segment the investment to only the saas product? If segmenting, then what’s the reasonable ask from investors in terms of founders’ energy allocation between the two?

A: I think both options are reasonable. No wrong answer here, but depends on the long-term focus, current situation, whether and how the two businesses will operate together, etc.

In terms of allocation of energy, that’s again, a “it totally depends” answer. Sometimes it’s best for the founders to hire the SaaS team and let them run with it, sometimes they need to stop all client work and focus, and usually, it’s something in between those extremes.

Q: I have often wondered why there are no content-site equivalent of Thrasio. We do have companies like DotDash that have a portfolio of massive content sites, but not many VC-funded portfolio companies that target the smaller sites (that make $10K-$100K revenue).

Is this something that you think will capture investor interest in the next few years?

A: Probably not. Investors are (foolishly IMO) chasing companies they think can be worth billions and form monopolies, not profitable, small-scale, successful businesses that have stability.

This growth > sustainability mindset is pretty toxic in a million ways, but it’s where the market is.

Before & After MOZ

Q: What was your first company, and did you have any “people” skills prior to starting the company?

A: My first company was Moz. I started it in 2003, initially as a blog, then it became a consulting business, and finally (in 2007), it transitioned to SaaS. I didn’t just have no people skills when I started it, I had no real skills or experience of any kind!

I was a college dropout with nothing but what I learned from trial and error.

BTW – I *strongly* recommend not doing what I did, and instead joining a company or two that have similarities with what you want to build. You can learn a ton from even 6 months or a year in a business that can save you a lot of heartache later on.

Q: What did you love most doing in your company?

A: I love writing, publishing, creating, speaking/presenting, product ideation, dreaming up new features and tinkering with them until they feel just right.

Q: I guess at some point you started to work ON your company instead of IN your company, right? If so, how do you know if you have hired the right people. To know that they actually can steer the company safely (instead of running it to the ground in a few years)?

A: I hired a lot of right people and a lot of wrong ones.

But honestly, I don’t think I’ve ever developed a great radar for this. I’ve stumbled through, gotten lucky and unlucky, and now my best advice is only really applicable to very small teams, and that is: find people who you want in your personal and professional life in a deep, meaningful way.

People you want to see make money and professional progress at a similar pace to you. Treat them as equals, give them the benefit of the doubt, and have them set their own hours, schedule, and deliverables. Use contract work first, and only do full time if you’re very confident things are going great.

Obviously, that structure doesn’t work for everyone, but it works really well for Casey, Amanda, and I.

Q: How did you come up with the brand or the name “Moz”?

A: It’s taken from/inspired by the early open source movement on the web from companies/organizations like Mozilla, DMOZ, Chefmoz, etc.

Q: Moz was acquired many years after you left. How did it feel hearing iProspect acquired Moz for an undisclosed amount? What were you doing when you found out?

A: I got a heads up a couple of weeks before the transaction went through. Just FYI – iProspect wasn’t the buyer; a Private Equity firm owns iProspect and a number of other businesses (including things like IGN, the games industry publisher) – they bought Moz.

I was in a very sketchy breakfast cafe in San Diego when Geraldine and I got the email that the financial part of the transaction had finally gone through. We bought breakfast (and a surprising number of alcoholic beverages at 9:30am) for everyone dining there.

How To Work With Co-Founders

Q: What are your expectations for your co-founders?

A: I expect Casey to:

• Have good boundaries and honest communication: he needs to tell me what he can do, can’t, wants to do, hates to do, is loving, is frustrated-by, where he’s at emotionally, all that.
• Make commitments and live up to them. And when he can’t, just tell me. I do the same for him.
• Take care of his areas of the business (i.e. the technical sides of things – infrastructure, data sources, all the engineering), and let me know if/when he needs help.
• Be a shoulder to me in times when I’m struggling, just as I hope to be a shoulder to him when he is.
• Give me input on major decisions (hiring, strategy, big product initiatives, etc), and always let me know exactly how strongly he feels about something (e.g. is this a “I’m gonna be angry forever if you decide X” vs. “I’m pretty lukewarm on X vs. Y, but lean to Y”)

Q: How do you deal with co-founders that are not putting in the work, money, or success you expected they would?

A: I’m very lucky to have not had this problem, but one thing I’d strongly recommend is working together for a bit before you sign the docs to become cofounders, and then having very honest discussions upfront about expectations with a lot of clarity and detail.

E.G. I told Casey from the start with SparkToro that it wouldn’t be the only professional thing I’d be doing, and that I wouldn’t be putting in the same kinds of crazy hours I did at Moz.

(Good news – turns out hours are not the thing this business needs, but rather, good decision-making, and high quality, focused work when I’m well-rested and in a good place to do my best work).

Q: What is the strongest character trait your co-founder can have?

A: Oddly, I think it depends on who you are and what you value. Maybe the best answer I can give is the trait that’s most important to you in a friend, confidant, and colleague.

Q: What’s the one thing that can break up co-founders?

A: There are SO MANY THINGS that can break up co-founders. I think the only way to really control for this incredibly common, deeply painful problem is to:

• Work together in other ways first, before you start your company together
• Build a phenomenal rapport for open, trusting communication
• Create expectations very early, and have healthy safeguards and written-down processes for how you’ll solve disagreements, tackle problems, etc.

Q: After your previous experience with Moz, what is your advice to other founders about how to consider choosing their cofounders (or not)?

A: I think I’m probably more influenced by my experience at SparkToro (with

Casey Henry). At Moz, my cofounder was my mom, Gillian, and we had a fairly untraditional, almost accidental cofounding, so it’s a bit hard to extrapolate (plus the family thing, obviously).

If I had to do another startup, I’d choose my cofounder based on:

• Work we’d done together in the past and how it went
• Alignment on work style, strategy, product direction, what kind of company we want to build and work at, emotional maturity and emotional communication skills
• Complimentary skills and strengths (i.e. I’d need someone to fill the gap in my technical skillset, and I’d want someone who valued my marketing/presenting/product skills)

Bootstrapping SparkToro To 1,000+ Paying Customers

Q: To complement with SparkToro, what are the best PR resources/people you know?

A: Superb question! A few folks I really respect and follow in that space:

• Lexi Mills
• Sarah Evans
• Michelle Garrett
• Ross Simmonds
• Saffron Shergill

Q: What do you think is the biggest scalability issue for SparkToro and how are you planning to overcome it?

A: There’s three:

1. Internationalization to other languages and regions
2. Expanding sources of data in some of the more challenging-to-get-to networks (e.g. Instagram is a real pest to crawl, even though the pages are technically public)
3. Succinctly explaining what we do/can do to a large audience of marketers in a way that resonates (so they’ll think of us when they have the unique problems SparkToro solves)

In terms of solving them – don’t know yet! Working on all three (e.g. Casey’s nearly ready to test the launch of German and Spanish data for #1, we’ll see how that goes).

Q: How did Spark Toro come to exist? Were you considering a bunch of ideas?

A: Not “a bunch,” but a few. SparkToro was the obvious choice for a whole bunch of reasons (cofounder support in Casey, targeted an underserved sector of marketing, needed an audience I already reached, good margins, etc)

Q: What fixated your thoughts on this specific problem SparkToro is solving?

A: I’d been seeing SEO work for fewer businesses as the field matured and Google captured so much of the search pie for themselves. I also felt like no tool really did the job we helped with yet.

Q: Does it look like what you originally envisioned? How has it changed?

A: Very similar! I went back to the first doodlings and musings (in an old Moleskine notebook) and found that we’re really delivering on a bunch of those things even 3.5 years after the initial ideas.

Q: What’s next?

A: Tracking over time! The biggest frustration right now is that SparkToro demands you log in, do searches, and extract results to get value. We should do more of that for you, so folks can “set it and forget it,” receiving reports and notifications on what’s changing with their online audiences over time.

Q: How big do you think it can get? Does that even matter?

A: Nope! Doesn’t matter much at all. So long as we can serve a few thousand customers with a product they find useful and valuable, we’re in great shape.

I think it probably could get to $100M+ in revenue if we wanted to take the growth-at-all-costs, revenue-maximization approach, but that doesn’t interest me. I want a small, sustainable, profitable, “wow-that’s-a-great-deal” business.

Q: What’s the most important quality you look for when hiring a new team member?

A:

1. Values fit
2. Work culture/style fit
3. Skills fit
4. Communication cohesion

I know that’s 4 things, but… they’re all important!

Q: Who is your next hire SparkToro?

A: I’d really like to bring on a second engineer to back up Casey Henry, but that’s probably still a year away.

Q: Tell us about content marketing within SparkToro. What does your funnel look like?

Top = Twitter, Podcasts, etc?

Middle = blog posts on industry trends?

Bottom =?

A: Top – social, podcasts, webinars, YouTube channels, articles on influential websites, etc. (oddly, almost no search traffic at all)

Middle – free sign-up to run searches, email newsletter, and blog

Bottom – convert from free to paid account to get more access, features, data, and searches

Q: What’s the biggest win a SparkToro customer has shared with you?

A: My favorite was a TV show that used SparkToro to pitch one of the big streaming networks on why they should pick up the show after it had been canceled by a TV network.

They showed the streaming provider analysis of the audience following the show, talking about it online, using hashtags, etc., and made the case for why picking up their show would bring subscribers the service didn’t yet have.

Worked out, and now there will be another season!

Q: How did you decide on a “searches per month” pricing plan with SparkToro?

A: We wanted to tie plans to value, and number of searches is the best, measurable-on-our-end metric (along with need for depth of results in those searches) we could find.

Q: Being a niche product, what efforts have been worthwhile to increase awareness of SparkToro?

A: Getting in front of communities, publications, podcasts, webinars, newsletters, social accounts, etc. that our target audience already pays attention to.

That’s basically 100% of how we’ve done marketing in the first 20 months!

Q: What did/do you guys do to attract top talent?

A: I’m not sure I’ve ever attracted what other folks would consider “top talent”. I don’t look for people who’ve gone to certain schools, have certain companies or experience on their resumes, are considered “top 1% talent,” etc. Honestly, I don’t really buy into the idea.

I don’t think there’s “great talent” and “crappy talent.” I think there are “people who fit great with you and your company” and “people who don’t fit great with you and your company.”

Q: Aside from having a top-quality product or service, what’s the next single most important thing you’d say a business absolutely needs to do right?

A: Positioning. Read April Dunford’s seminal work on this: *Obviously Awesome* for more.

Q. What do you feel are the biggest opportunities for taking SparkToro to the next level?

A: Over-time tracking! I.E. you tell us an audience you care about and we send you regular updates and alerts when their behavior changes, they start paying attention to new sources, start talking about new topics, start sharing new content, etc.

Lost & Founder: Life & Business Lessons

Q: What is the biggest mistake an early-stage startup can make?

A: From my research for Lost & Founder, I think there are three biggest killers of early-stage companies:

1. Wrong founding team (folks who can’t get along, can’t form reasonable expectations for each other, can’t be supportive in the right ways, etc)
2. Wrong financial and funding structure (e.g. trying to chase venture instead of alternative sources, or using personal capital, loans, etc. for a business that won’t return capital at the right speed or quantity)
3. Some combination of wrong product, wrong market, or wrong audience targeted

Good news: if you get those things right, you’re likely ahead of 90% of new companies!

Q: What was the hardest experience to share publicly in Lost & Founder?

A: That board meeting before the layoffs, when I insulted our investors and made an ass of myself. That was definitely the story that even my editor wondered if we should share.

Q: How did you make the decision to step down as CEO? Can you provide some color around how long that process was and in choosing a successor? e.g. How long did it take you to realize someone else might be better for the role? And now that it’s been a few years, in retrospect what would you have done differently (if anything) in either the lead up to making that decision or the transition itself?

A: I was suffering from a serious bout of depression, so it was less of a long-term, considered decision and more of a health-focused move.

In retrospect, I wish I’d stayed CEO and merely assigned more of my responsibilities and duties to other folks on the leadership team so I could heal, then return and lead from a better place.

Q: How did you weather the voice inside you that says it’s enough and you should go home?

A: I’ve never had that voice, TBH. I’ve only had the “you’re not good enough!” and “your investors/team didn’t believe in you!” voices shouting at me in my head. Proving them wrong is pretty motivating.

Q: What’s the single biggest motivating factor in your business/life for you? How would you approach building a publishing business (websites) today vs back in the days? And how can SparkToro add some angel dust on top of that (if it is not one and the same)?

A: I’d focus on getting emails and subscribers to a paid (even very inexpensive) subscription of my content > lots of traffic.

And yes, SparkToro can certainly help identify the sources of influence in a given sector and the topics of conversation/interest among an audience, which can be hugely helpful for informing the promotional tactics you pursue.

Q: What are the biggest challenges you faced in your journey? What did you do to turn them around?

A: Lost & Founder goes into a lot of these in detail, but short version:

• $500K in debt after trying to get a web design agency off the ground; we somehow dug out of it by shifting to SEO consulting and slowly paying back the credit card companies
• Feeling trapped in a company I’d built but no longer controlled after I stepped down as CEO. I’m not sure “turned it around” is accurate, but eventually, I found the courage to leave/piss off enough people that I was asked to leave.

Now, I’ve got a business (SparkToro) that I get to redesign from the ground up, and so far, it’s been an amazing journey.

Productivity Hacks

Q: You’re a very busy person juggling a lot at the same time. For those of us who struggle to get things done efficiently, can you take us through your organizational process?

A: I run everything through just two channels: email and calendar. If it’s not in one of those two, it doesn’t exist. I don’t have separate task lists nor do I use Slack or anything else like that. The streamlined approach to work gives me a simple, clear way to know what I need to do (and don’t).

Q: What are some things you do to tackle burnout?

A: Bunch of things:

• I rarely work more than 40 hours a week
• I never work consecutive 40+ hour weeks
• I only take on tasks that I’m really excited about or am certain we absolutely need to do
• I outsource as much as possible
• I say no to almost everything that comes across my “desk”
• I run all my work through calendar and email; nothing else
• I prioritize sleep, daily exercise, and eating mostly healthy (granted, probably too much pasta)
• I try hard to spend a good amount of each day on things I can do for other people, especially friends and family

Q: You seem to have a different work style and culture that you subtly hint is not mainstream. Can you explain the workstyle and benefits of it?

A: This blog post is the best way to explain that.

SaaS Marketing & Growth Hacks

Q: How do you sell a SaaS product to a market/profession which is not yet acclimated to using SaaS and they are very resistant to changing the current processes that work for them?

A: Hmm… Almost every business has come around to SaaS at this point. Very unusual to find a sector that doesn’t. That said, best way I’ve seen is to market yourself like something/anything they are familiar with (even Microsoft Teams or Slack or Adobe Suite).

Q: I, and many other solopreneurs I know, are stuck in the “do I scale or not” scenario. You know you will make less money by bringing on more staff, but you’d like to think it’ll pay off in the long run. How do you know when to go for it?

A: Definitely a tough question, and I think the answer is always different for every situation and business. The inputs I’d use to think about this are:

• Are you excited to work with other people? Will it bring you more joy and fulfillment to have more folks on your team? Or does that fill you with dread?
• Assume the folks you bring on can work at maybe 30-50% the capacity that you have, does it still make sense to scale up in people? Are there processes you need to invest in first to make them/you/the business more efficient?
• Less money but more freedom to do what you want, what you’re good at, and what brings you contentment is usually a pretty good tradeoff. Are the tasks you’re hiring for ones you *hate*? Or ones you’re bad at? If so, it can be a huge life benefit to take those off your plate and give them to someone who can do it better/enjoy it more.

Q: A lot of agencies innovate on their internal workflow & release those workflows as SaaS. What do you think of this agency’s SaaS journey? Is it a distraction? Is it more viable than bootstrapping on SaaS revenue alone?

A: I think it’s a fine way to go if it’s what you really want, love, and are passionate about. But it has to align with your and your team’s interests, passions, and structure. Bolting on a business model just because it’s sexy or seems like a money-maker rarely works.

Q: What are some of your best saas company growth hacks?

A: Don’t raise VC. Focus on profitability. Build an audience of people who care about what you’re doing, like you, and trust you before you ever launch your product.

Stay tightly focused on solving a single, painful problem for one concentrated audience better than anything else out there. Don’t worry about competition; worry about delighting customers.

Q: If you owned an SEO Agency focused on helping SaaS companies, how would you market it?

A: I’d probably urge the agency to focus on a more specific niche, like B2B SaaS in Europe or SaaS for online retailers, that sort of thing. There’s just so much competition in agencies who focus on SaaS that you need some differentiation.

I’d also consider focusing the work less on raw traffic for even customer acquisition and more on retention and churn. There are far too few agencies that help with that (granted, a hard thing to do if you’re purely SEO).

Future Of Marketing

Q: How do you think Google will evolve in the next 10 years?

A: I think they’ll keep benefitting Google shareholders > the rest of the Internet.

Q: How do you think Google will benefit marketers going forward?

A: Less and less.

Q: How do you think marketers will benefit (or have to evolve) going forward, not just with google but as marketers in general?

A: I think we’ll all need to look outside of the Google/Facebook/Amazon monopolies to find marketing opportunities. The best suggestion I’ve got is to find publications, people, and sources of influence that already capture your audience’s attention and have their trust, then do marketing through those sources.

Q: Do you think AI have any place from Googles side (when it comes to “stealing” content. Leading to visitors not going to a website), or from marketers side where they use AI written content (for pumping out 100 articles spreaded out on 5-10 blogs) ?

A: Yeah, Google’s obviously using “AI” (mostly machine learning, not true Artificial Intelligence) to aggregate results they scrape from websites and put them into their own instant answer boxes. Sucks for all of us, but is helpful enough to users that so far, they’ve gotten a pass.

Not much the Internet can do against Google’s power.

As for AI writing your articles for your website… It’s possible, but there’s almost no chance you’ll get value from it.

Fun Q/A

Q: What was it like being on Oprah? And did you sing your version of Jenny from the block to your friends when you were done?

A: It was weird, but fun and interesting! She was very professional and polished, but not particularly warm. The crew was similarly efficient but not personable. Worked out fine, though – we got to visit Chicago, stay in a nice hotel, and visit the Chicago Art Institute, which was amazing.

Q: What’s your favorite shampoo brand?

A: I had an amazing experience with an Italian shampoo brand called Laura Tonatto. Haven’t yet tried to find it here in the US, though.

Q: Pros & cons of being a mustache & beard connoisseur?

A: Pro – beard helps cover distinct lack of jawline.

Con – healthy amount of facial hair maintenance required, shows gray + white much earlier than head hair.

Q: Do you have any hidden talents?

A: I can touch my nose with my tongue?

Q: What’s something you’re bad at?

A: Programming

Visual art

Dancing

Bureaucracy

Having empathy for people of different political persuasions.

Q: After all these years (though technically not a direct SEO question) what was the worst email blogger outreach attempt you ever had and how did you respond to that?

A: I recall someone emailing me about how their connections could help me “score with women”. I didn’t just report spam, I tried to find their social accounts and websites so I could report those too.

Q: What happened to the yellow sneakers? Any current sneaker interests, or are other items like cool shirts and sweaters more where your style interests are these days?

A: Ha! Been forever! I still technically have the yellow sneakers but haven’t worn them in years. Maybe if there’s a big conference someday post-Covid I’ll bust them out again.

Couple of shoe brands I really like: Supply Lab and Zerogrand.

Recommended Influencers & Resources

Q: Who is your favorite artist, scientist, writer, and marketer?

A: Hmmm… I don’t think I’ll get one favorite for each category, but some favorites (plural) include:

• Rebecca Sugar (creator of Steven Universe) and the Estonian artist collective ZA/UM (creators of Disco Elysium)
• She’s an economist more than a scientist, but I love Dina Pomeranz’s work (Swiss Economist with a great perspective and Twitter feed)
• Honestly, Geraldine DeRuiter’s writing stands out to me as some of the most sharp-elbowed, humorous, clever, and enjoyable of anyone out there. It’s a big part of why I married her
• SO MANY PEOPLE! I have deep admiration for Amanda Natividad (obviously, which is why we hired her earlier this year), but Melanie Deziel, Purna Virji, Nandini Jammi (of CheckMyAds), Lindsay Wassell, Asia Orangio, and dozens more are on my list.

Q: What kind of content do you consume?

A: Content I consume:

• Lots of Hacker News
• Lots of stuff via my Twitter & LinkedIn feeds
• Plenty of Google News (despite my distaste for Google, there’s not a lot of other great products in this space)
• Pocket (esp. Pocket’s topical recommendations)

Q: When I first started writing content like 7 years ago I was referred to Moz to learn more about SEO. I really learned a lot in those days and I enjoyed your videos/posts a lot. So I’m wondering, what was your Moz? Who did you first turn to in the industry? Who was the first source you were recommended to?

A: I mostly started in forums like Seochat, searchenginewatch, highrankings, etc. My frustration was how many participants in those places were secretive with their knowledge and experiences because they believed it was their competitive advantage.

Moz was, in many ways, a reaction to that – my desire to “open source” SEO knowledge is why the name Moz was chosen (like Mozilla, Chefmoz, Dmoz, etc – all parts of the early democratization of information movement).

Q: What do you find is needed for brands in the age of content overload where everyone has a platform?

A: Just do it! Do your audience research, interview people, take your best guess, and then take a shot. I honestly think this is one of those areas where the answer has changed very little in the last 50 years (other than getting massively cheaper thanks to the distribution possibilities of the Internet).

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