How Noah Kagan (From AppSumo) Built A List Of Over 600,000 Followers (After Getting “Fired” From Facebook)

Clay: Hello everyone, I’m Clay Collins…

James: I’m James Lepine.

Clay: …and in this episode of the Marketing Show, you are going to see the very first 7 Figure Interview. So we’re doing a series of interviews of owners, founders of 7-figure companies. This first one is with Noah Kagan from AppSumo, built a list of over 600,000 people. It’s an amazing company. It’s an amazing interview. That’s what you have to look forward to in this episode of the Marketing Show.

All right, so in just a second, we’re going to get into that interview, but first, James, what do we got?

James: First, we want to give a shout-out to all the folks who commented on last week’s episode of the Marketing Show. Thank you so much for doing that, and we just want to give a shout-out to the folks who did a smart insightful comment who contributed to the conversation in one way or the other.

Clay: These are good people.

James: So here they are.

Recording: Hey everyone, it’s that time of week. It is time for the Marketing Show shout-outs. So here we go. Let’s go ahead and give a shout-out to Derek Halpern. Thank you for your comment. Let’s also give a shout-out to Jonathan Mead, appreciate it. Also Monica Lee. Thank you for your comment. Mark Quinn, we appreciate it; and Simon Payne, thank you as well; and finally, Kat Lessin. Thank you so much for your comment. Thank you for watching the Marketing Show.

If you’d like to be featured on next week’s edition of the Marketing Show shout-outs, you know what to do. Just leave a comment below, and you will be considered for next week’s edition of the Marketing Show shout-outs.

James: So Clay, tell us a little bit more about Noah Kagan, and why we’re only doing this interview series once a month?

Clay: Yeah, so I think there’s a lot of really good interviews on the internet. I’m a huge fan of interview shows. In this one, we only want to focus on people who are doing 7 figures plus in their business. I think there’s a lot to be learned from people who are just starting and also doing 6 figures, but I think it is especially important to hear from people who are having a higher level of success on the internet. You know, it’s important to learn from everyone, but I think there’s really a gap in knowledge, and I think a lot of interview shows are a little bit too liberal with who they accept on the show.

And so in this one, we’re being extremely picky. We’re only focusing on 7-figure, 8-figure, and 9-figure businesses, and I think there’s sort of a niche that can be filled there, and that’s what we’re bringing to you. So let’s kick this off. Noah Kagan, the interview starts now.

Internet Entrepreneur Noah Kagan On Business Failure And A Marketing Plan

Hello everyone, this is Clay Collins. Welcome to the first and inaugural interview series for the Marketing Show. On the other line, Noah Kagan. Noah was number 30 at Facebook, number 3 admin in-charge of marketing there. He’s grown two multimillion dollar businesses, and I really wanted to start this series off with a bang. So Noah, welcome to the show.

Noah: No pressure. It’s the first, so this is obviously, we could be better. We could set the bar high or really low, and then it will be just as fine.

Clay: Awesome, awesome. Do you know, one thing I’m really impressed with about you is just kind of like how casual you are and how I think humble you are. I mean your name is pretty well known I think in Silicon Valley and in the startup community, and I think despite that like you don’t come off like a douchebag, and I’ve met a lot of douchebags…

Noah: You don’t know me very well.

Clay: Cool. So could you tell me like, you know, just the 2- to 5-minute version of what AppSumo does and what you’re currently doing right now?

Noah: Yeah. I mean just a touch on that douchebag thing. You know, I wouldn’t say I was a douchebag before. I was much more greedy and much more self-centered. I was. And then I got fired from Facebook, let go. That’s what I told my mom to make her feel better. And that was a big realization of like how unimportant I am, right. I was just like oh well, everything I’ve done that I associated with this other thing like they could take it away from me and then who am I really. I mean the second thing like…

Clay: To be gone in 2 seconds.

Noah: What’s that?

Clay: To be gone in 2 seconds, yeah.

Noah: Yeah, it’s like a Nicolas Cage movie, but worst. And then the second thing was like I started putting on some events in the Bay area. And I’ll tell you, putting on events is probably the best way to meet people and to get yourself known for a certain topic. Like I was absolutely shocked because I started – I started putting on events about conferences for social networking like this early days of Facebook. I only did it because I wanted it, like I brought the guy from Suicide Girls, PotorNot, like really like cool, like plenty of fish, like really interesting speakers, and because of that, people are like, ‘Oh, Noah’s an expert in social networking and social media, but then started calling me a networker, and that’s when I was like I’ll stop doing conferences.

But I think the Facebook experience and like being called the network and things like that have really helped me understand that the biggest way that you can get known or be successful is just putting your business first because I used to put Noah first, and a lot of people can do that. If they want to that’s fine. But I say you put, you know, your business brand ahead of it. You make that really successful and then, you know, it kind of like was it transitively or like it passes off some of the karma to you.

Clay: Cool.

Noah: We’re in that now. Oh, sorry. Go ahead.

Clay: Well, you know what? Dude, I totally – Yeah, I want to hear what’s coming next, but did you find that because you put on events, people would make really cool connections, and even if you didn’t like necessarily talk much to either the people who created connections that they would attribute that to you like you became the context and…

Noah: Nick Holland from CentreSource set it – I didn’t mean to cut you off, but Nick Holland from CentreSource said it really well a few years ago. He said, “Anytime you could be the hub, even at the local community, you will get more respect, you’ll get more customers, you’ll get more credibility.” And so yeah, that was actually funny about conferences because I put on the conference to hear the speakers, and to my surprise – Well, there’s two surprises about it. 90% of conferences is the relationships and networking and meeting people. I had no idea. I thought it was all about the speakers and hearing that. But then, them and the price point is actually a filter for the quality of people.

And then the second thing that was interesting. You get a lot of money doing conferences like I didn’t try to make money, and they did like $40,000, $50,000 each time.

Clay: Wow.

Noah: So I was like it’s kind of cool, so I did a few of those.

Clay: That’s awesome. That’s awesome. God, there’s so many rabbit shows that you can go down. Tell me about AppSumo.

Noah: Yes. So AppSumo – You know, Taylor, one of the guys that works with me at it, he said it’s really interesting. So we kind of started off – And he said that – I want to tell you through a story. And so it started off I saw some sights, and I said, “All right, let’s do a Groupon of digital, a Groupon for professionals, digital, you know, daily deals,” and we kind of did that for about a year, and what we realized though is that we’re selling all these kind of assortment of products, and you know, what I’ve said before, it’s like we were selling on these pickaxes during the gold rush.

But what we found out the most surprising thing is that people don’t want the pickaxes just to pickaxes. They want to know how to effectively use the pickaxe. And one of my favorite quotes is Abe Lincoln quote where – Have you heard this one where – You know, I hate when people quote shit. I’m like yeah, I’ve heard that like I know that fucking quote.

Clay: Tell me, tell me.

Noah: But the Abe Lincoln quote is like if I have 8 hours to chop down a tree, I would spend 6 hours sharpening my saw, and then 2 hours chopping or something like that or chopping with my ax. And so I really like that approach. And so what we found out with AppSumo is that, you know, 60%, 70%, 80% of business, people really wanted to learn how to do stuff, like how did we grow this business, how do you do marketing, how do you do – You know, how do you write an e-mail? Like how do you get cocky writing?

And so, you know, we’ve kind of moved the business more into – I don’t want to say the next generation because that’s such a cliché and cheesy generic word, but I think what we found in our niche, in our success, point is that creating – promoting other people’s content, but mainly, we want to focus on creating content that is fun and actionable for business people. And so that can be from anyone like you’re in a shitty desk job to like you’re in college wanting to start your business or someone like you who’s running a business and is like man, I really love to learn how to do hiring. I really love how to do interns. So we’re going to go out to the experts and put that kind of material together in a non-boring way.

Clay: Yeah, awesome. So for everyone listening, like even though Noah’s speaking a lot about the evolution, you can hear some of his internal processing going on. I want to let you know like AppSumo has what? Like 600,000 e-mail subscribers at this point. It’s a 7-figure business. You guys are what? I mean you’re past the – You’re past sort of that first stage of building a business. They’re formidable at this point like they’re kind of a big deal.

Noah: Look at you… your audience is learning some big vocabulary. They get on like the thesaurus.com

Clay: Anyway, so okay, so that’s awesome. So you start out selling tools, and now you’re selling primarily information about how to use those tools. What are some of the miracles that you’ve pulled off like whenever I talk to entrepreneurs, there’s usually a certain set of things that they kind of knew they were going to pull off, and then there’s a set of things that they would pull off that they didn’t, and then there’s shit that just happens that they’re like, you know, we really needed this wind because this other thing I thought was going to work didn’t, like what are some of the things that have happened that have just kind of blown you away?

Noah: Yeah. I mean I’m going to touch based on things you said earlier and get to that. I would recommend that everyone go check out David Skok, D-A-V-I-D space S-K-O-K. He has a blog ForEntrepreneurs.com. It’s free. He puts out insane materials, and one of the thigns that he says about business which I felt was really fascinating is that there’s kind of three stages of your business. There is like the beginner validation stage, the figure-out-your-marketing stage, and then the scale stage. And so we’re kind of like we’re in two and we’re trying to get fully into three, which is like, you know, pedal to the metal. Well, let’s see how many clichés we can do.

And so with AppSumo, the original premise of AppSumo, the actual idea was how do we distribute software to professionals effectively? There’s not a great way to do it, like that was the, like man, how do we get this companies, you know, who have good products but just suck at marketing or people don’t know about them. And so I see the big aha moments that have happened so far. We only started doing advertising. That was a huge aha moment where – The thing is to when I say that a lot it seems so trivial, but it was like at the time, we started spending a little bit, then we’re spending more, we’re like holy shit, this one is coming back because the first two months, none of the money came back like nothing, and I was like…

Clay: Like you were losing money.

Noah: …it’s over, and then, you know, we kept refining it. One side note for the marketers or entrepreneurs in the house, I found that anything that you want to be successful with is at least 6 months of failure like sometimes you have that overnight thing, but at least 6 months expect shit.

The other stuff that’s been really fascinating was e-mailing everyday. And I know this is the stuff – I don’t want to just disclaimer it and I won’t do anymore. This shit seems obvious now because we’re like Groupon them everyday obviously go off. But we don’t – I don’t fucking know. I just tell them like sending e-mails like we’re sending twice a week, and one of the guys like dude, just send every fucking day and see what they do. And people didn’t complain.

And what I actually found even more surprising than that is people really want more e-mails. They want more communication. They want more ability to find out that a third aha moment is that I have my own opinion about AppSumo. I remember at Facebook, we did user testing, and so someone was moving their mouse in the screen, and I was clicked here, but they clicked here. I’m like, “No. Click there. Click that fucking button.” And at AppSumo, what I found surprising – because I thought people liked the deal. I was like oh, they like the specials, our way to negotiate, and promote. People really like discover it.

And so it’s actually – And one of the biggest things that I found that I’m pretty good at, and I think, you know, people should try to consider it for themselves is I’m good at planting anomalies in our data or in the business that are working effectively. And so what I mean by that is if you could look for things and then see like – I love the scenario, but you look for like the spike. Go back to that spike and see what you can do about it. And so a specific thing with us, you know, I’ll tell you candidly is we have seen that some of our own products do a lot better than anybody else’s, right.

And so what we do is keep running our business the same way we’re running it. I mean you talk about that kind of offline – Oh, you know, that’s an offline actually in the real world when we have hands and frolicked in the park, but one instance is that we found that our own products worked well. And so what I think a lot of people do in their businesses, they’re like well, I’ll keep doing everything the same way we’re doing it. But if you’re seeing something that’s working well, try to figure out why that is, and then like double down on that immediately.

Clay: Yup. So if you’re looking at like, you know, you’re incoming, you see a spike or there’s something, there’s an outlier. In other words, a lot of times, people say like something good happened to me. Oh well, like, I have some blocked…

Noah: Oh, I thought exact…

Clay: …and you’re like fucking scale that luck.

Noah: Dude, I have so many examples of that so I was doing this ad by on this one newsletter and – I was doing it once a week, and I was talking – Everyone should – And everyone should get a single adviser, not more than one to start. Add one adviser who’s very specific. I’m previously much more tactical, much more like executioner, and he’s much more theoretical and strategic, and so we balance each other out. And now I’m trying to be a lot more strategic, but I was talking to them. I’m like, “Yeah, you know, advertising in this magazine, it’s $750 a week.” And you know, he’s like, “Well, when do you get the money back?” I’m like, “The money comes back every 30 days,” which is very, very good.

Clay: That’s amazing.

Noah: Yeah, that’s really great. And he’s like, “Well, why aren’t you advertising twice a week?” I was like, “I don’t want to bug them, and we’re already sending the e-mail, and blah, blah, blah,” and he’s like, “Do it.” And so that’s another instance of like maybe you need someone else to help locate your data or review things with you, but it was saying, alright, this is working really well. Let’s go do a lot more of that.

So I think that was a big aha moment. And see, I’d say fourth – I mean the last four thing. This is – I’m not even going to disclaim it, but I’d say hiring the right people at the right time. It’s not about hiring the right people, but you have different stages in your business, so in the beginning of AppSumo, I have just humans, like I just had bodies there. And then stage 2 was – You know, stage 2 is like hey, I’m, you know, smart enough to figure out how do we get from like, you know, $100,000 business, you’re like a million dollar business. And also – I mean obviously with the assumption of our product and what we do people like. I think that’s messing a lot of the marketing. People are like let’s just make money and give art, like you can never do great marketing if your product sucks, and if you can, it will be very short sided.

I could tell you a story about pigs in Austria about short-sided marketing, but what I found with AppSumo is that there’s different types of people like column zeros, ones, and negative ones. So negative ones hurt your business, zeros keep your business the samem and ones actually grow your business. So you fire all the zeros and negative ones, and then your ones, you start having people as you get to stage 2 and stage 3 that a growth of the business where they’re actually coming in and they’re helping grow your business without you.

Oh, let me just add one more with that one.

Clay: Totally.

Noah: I know. I’m going to give you a juicy one. The fifth thing I did that was an aha moment was adaptic planning. And so adaptic planning was me removing myself from the business. That was one of the hugest things to help AppSumo grow. And so a few ways in order to… is if I were to die, where am I hindering the growth of the company? Why would the company not be growing naturally if I’m not there? And so, I think, you know, if different people will – if you’re like – I can’t be gone because this one happened. That needs to be fixed.

And so I literally went through the whole business and said, “You know I’m doing the calendar with the deals. All right, you take the calendar.” And then one thing that I did that worked really effectively was I went away for 2 weeks.

Clay: Nice.

Noah: You literally leave your business alone, and you come back, you know, and you see what things happened. So like we have a report that comes out every Monday. Okay, that keeps me informed about how the status of the business is going. You know, I get e-mails from some of the reports. Okay, good. I got my reports now. And the teams that were getting limited or the teams that weren’t able to grow without me. We were able to try and identify what that is, and that’s still a work in progress. But I think the death plan was a huge help because now, instead of worrying about the day-to-day details of the business.

Like yesterday, it was really funny. I saw Sung Ho. He was working a negotiation with a partner, and I was like, “Oh yeah, we have to do those stuff,” like I’m just so oblivious to that because I have been so disconnected. But removing myself has helped me see like which piece of the business we need to be improving like wow, this is a big bottleneck. I need to either hire someone or fire someone or do something about that piece of the business. And so you can really get that when you’re disconnected.

Clay: Yeah. Do you know what I find myself bragging with my friends about and other entrepreneurs is like the shit we don’t do in our business like the other day, I was, you know, talking to friends like I haven’t even logged into our e-mail system like once yet. I don’t even know how to do it. They’re like I don’t even know how to check my e-mail, you know, and someone else is like I don’t even know like whatever, but yeah, that’s awesome that you said that. That’s really cool.

Noah: It was funny I was talking to my cousin yesterday. You got me thinking about it. He was like, “Man, you know the great…” like I run the Belize next week on my cruise with my family, and you know, I get a – No. unfortunately, I need cello a little bit to speak, which is very flattering in it. You know, I like the message that I get to share. I love to talk about AppSumo.

Clay: That’s cool.

Noah: My cousin’s like, “Man, that’s awesome. And you know, fuck you, I can’t believe you get to love like that.” I’m like – He’s like, “You’ve got it made.” I was like, “No, I don’t have it made. I made this,” right? And I think that’s missed a lot of times like this is 10 years now. I had a lot of failure, getting fired, some success, but it takes a little bit of time to get to where you want to go. And I just thought it was fascinating to be aware of that, you know, from his comment.

Clay: Yeah, absolutely. So I’ve heard a lot of talk. I think, in general, and a lot of places about that phase 1, and I think phase 1 is important. It’s where a lot of people start out obviously, but I don’t think there’s enough talk about phase 2, right? So what happens after? You know, you get that business op. You have proof of concept. Do you have enough going on that you can see hey, something’s going on here. This is viable. So I would like to spend a substantial amount of time of this interview talking about how to get from that maybe that first viable product or proof of concept and really scaling that, right. I know you say that you haven’t gotten to phase 3 yet, but I think in a lot of people’s eyes, you found a scalable traffic strategy. You’ve used that to build up a list of 600,000 plus. What happened in between – You know, you spent $200. You got that first version of your site up. You did all this like boot strapping stuff. Let’s put that to site. What happened between stage 1 and stage 2? I know you talked about buying advertising. It sounds like you guys are just crushing it on Facebook. Was that sort of the main thing that took you from phase 1 to phase 2? I’d really love to hear the desk section of that transition from phase 1 to phase 2 with as many specifics as you can provide. You know, I’d really love to know like you mentioned that you’re boot strapping. I’d love to hear about, you know, how much money sort of you lost in that phase or made. What strategic bets you made, and just areas of major risk, and how you navigated that.

Noah: Yeah, so I go through some, you know – Like the ultimate thing is that your audience and your viewers can do this and actually because it doesn’t help them if they just hear what I exactly do, but I can – It’s trying to understand the fundamentals behind it so that they can apply themselves and…

Clay: Yeah, I completely agree, and I think that a lot of times, when the specifics speak to the fundamentals better than the generalities in a lot of cases. So yeah, if you can use some illustrative examples, I would love that.

Noah: Yeah. You know, I’m going through a lot of them. I’ve got so much failure, but I am – I actually did the whole presentation about all my failures and my – There’s a lot. It’s like a 4-hour fucking talk. So a few things in terms of phase 1 to phase 2. For phase 1 of the business like I literally did everything. So I programmed, I bought the Apps, I did the support, I did the sales, I didn’t really get much the design, but literally, every component – So we have – We are 4 teams in the business now. I’ve done all of their jobs.

And what you want to do is phase 2, start hiring people that are better than you’re at those jobs. So I think that that’s the only key thing that I had a chance to give because now, when someone is doing ad lying, I’m like, no, that’s actually wrong because I’ve done it. So it gives you a really good understanding of the business. The other thing is staying very, very focused, and so what we’ve done is we pick one metric which was e-mails as our main target, and so every month, we basically take 3 months, pick a target, then we barely get to one month, then we get to daily, like I’m looking at our daily stocks as we’re talking like we’re definitely not going to make our daily goal, but we break out why we’re not going to make our daily goal so the next day, we can actually fix that.

But the single point of focus makes the business very clear, and you ask anybody in our team, they know exactly what the main goal is. We are adjusting that because we’re finding the quantity of e-mails is actually not as important as the quality of e-mails. So you know, it’s nice to say you have, you know, a list of 600,000, but I think I’d rather have a 100,000, you know, really quality penis, you know, if you know what I mean.

So other thing in terms of focus is that we tried, you know, our original point was to distribute software for professionals, and so we built out another product. I think it’s still there. It’s called WorkLevel.com, and you know, we thought that was more defensible. We thought it was more scaleable. We thought people would enjoy it more. Actually, it might be, but that cost us about $15,000 and 4 months of work, and what we found out at the end is that we’re too small and we’re too little of a company to try to take on too much stuff.

And so in the phase 3 of the business – I’ll jump ahead, but I’ll come back – I’ve actually found out that we’re too broad still, and I find that the more specific we can be the better we can do for those specific customers and the better we’ll do for our business selfishly, and I think that’s a huge thing that I’m being – You know, we’ve talked about this a bit, and I think that that’s a huge awakening work. It’s like the more narrow and targeted you can make your business, like look at all your customers and basically like I kind of spend time like in the beginning, I used to spend time optimizing my unsubscribes. I was like oh, the people that are leaving, please don’t leave me. And that’s like begging your girlfriend who’s cheating on you not to go, right. They’re going to go. Let them go. Go to the ones that already like you like go make out with them.

So other things that have been transformational, I think hiring has been a huge thing, and I think a lot of people, it’s hard for them to let it go, and I think it’s hard for them to hire the right people. We do have an AppSumo hiring video that shows like how we hire people. I think one of the key things I could give some tidbits, but you’d make it really hard, make it a very long process to get the job because they’ll appreciate it more, and make it very objective where you can actually score people. So have questions that are scoreable like typing speed is one of my favorites because I chose how much they use a computer or not, and yeah, if they’re smart they don’t know how to type, but yes – Seriously, I’ve seen a high correlation around typing speed and how smart you are.

And so hiring has been a huge transformational part where, you know, I used to do ads and it’s like whoa, I can’t do any part of the business because I’m spending all my day on ads, and then so we started hiring those people to remove myself and also to accelerate it. So I’d say look for the cruxes in the business that are holding you back and replacing them with people. A key thing is I’d say for phase 2 is look for dependencies in your business that are holding you back.

And so what I mean by that is when we are doing AppSumo, we’re doing, you know, daily deals, right. And so what was happening is we’re spending, you know, $2,000 to $5,000 on ads everyday, and I’m looking at my finger if you’re listening to podcast, but we were kind of putting up the deal and be like how do you do today? How do you do today? And it’s very hard to scale a business where everyday, you’re unsure of the outcome.

And so then we said, “All right, well this is a dependency.” You literally make a list of all the dependencies in your business that are holding it back, and we basically reviewed that part of the business with the key part, and so we build algorithms or we built some analysis and things like that, so that, you know, today, I’ve literally have, you know, pretty good idea how much we’re going to make to it, and that’s not from luck, but it’s from like we spent, you know, a year building out a lot of stuff to solve those problems.

Clay: Cool. Well, what I’ve seen and I’d love to hear your take on this. What I’ve seen is that when – at the end of phase 1, generally speaking, a company has if not a specific offer, but a specific type of offer that they know crushes it, and they have a traffic source that consistently converts on that type of offer, and then phase 2 is about skill in that, does that conform to what you’ve experienced, and if so, what was sort of that type of offer and what was the traffic source that just crushed it because it looks to me like what you’re doing is you are scaling a certain type of offer with a certain type of traffic source right now. Is that case or what’s going on?

Noah: That’s a really great point. You know, it’s funny. We talked with the team. We do this brainstorming thing. It’s a pretty fun game like you guys should all try. You take sticky notes, and you ask a question, and so the question could be – One of the questions I ask 2 weeks ago is that we could start AppSumo over today knowing everything we know, what will we be doing differently. And then you have everybody on your team where or it’s you and some friends, you put it up on those wall, the sticky note, and then you each 3 boats, and you boat all of them at once, and they you take the top on. If you say, “All right, well these are the three things that’s interested for brainstorming activity, and we found that really helpful.

And the key thing that everyone on the team said it – And I’m actually always surprised. Now, I’m not as much, but I was surprised in the meeting like how much knowledge and ability the team has if you hire the right people and actually listen to them. Like I’d ask, you know, how can we improve, and a lot of the ideas there are way better than mine. I just take the credit for them. That joke. But the number one thing that everyone said was, we would do less. We wood do much less. And so want I mean by that is we wouldn’t be doing a deal everyday. We wouldn’t be promoting, you know, 300 different types of products. We’d pick one or two types of products that we are personally really interested in either others are salves, and really focus on that.

So I think the three stages if you’re doing more of an in pole marketing business is that right? So it’s funny in the right product that has customers who have money and what to pay for it. It’s a real problem. And you have the quality solution, not some bullshit thing that like they’ll never buy from you again. And that’s what key matrixes. Well, people come back – Well, partners come back and let us promote on the gig, and there are customers where put out there.

Secondly then, you’re trying marketing activities to figure that out. So an Info marketing, it’s affiliate stuff. I have never had success with that, and it’s not really my thing yet. But we found great success with advertising, newsletter sponsorships because we said, “Hey, you’re reading another e-mail. Why won’t you read our e-mail?” We tried Google. You asked when this started. Some fellow we spent $40,000 in Google, and we’ve made back around $3,000 over the past year, and I’ve had 3 different groups of people trying to solve it, and we’re still working on it.

Clay: Wow.

Noah: The point is stage two is really exploring the marketing activities that are why, and stage three is double on gown. So newsletters worked really well for us, so we – You know, I spent a lot. I don’t know. We just spent $20,000 on a newsletter for 2 months, and Facebook, we’ve gone from $200 a month to we spent around $150,000 a month. I’m trying to spend more, and so you’re asking stage 3 of the business, I think for – You know, it’s fascinating because people see where we’re going. And stage 3, we’re trying to get a simplifying create letters.

And so what I really want to do is create like a box. This is a candle. It’s an oatmeal-scented candle. I love oatmeal candles. And so what happens at the leverage though is that you’re put stuff in, and you should be able to crank the ladder to make it bigger, more come out. You put in a dollar here, and you get $5 there. And what’s happening with that Sumo is we kind of have like a tear from boxes. Some of the levers are broken and so what I’m trying to do with the business and the team is say, you know, I’m just going to do this. I’ll put my – Here’s my oat, you know. This is actually oatmeal that I was eating. But what I want to do is maybe have one or two that are very simple and very clean, and every time I put it in, I know exactly the marketing activity and the product and the outcome that’s going to happen from that. And so that’s just simplifying the business for the stage 3.

Clay: If you could only sell one kind of offer that only have one traffic source…

Noah: Right.

Clay: …what would those be?

Noah: Yeah, ask him for the good stuff Clay. There’s probably – If I could have one traffic source, it’ll probably be productivity sites like Tim Ferriss, Zen Habits, Life Hacker, anything related to personal improvement because that audience has trained – They’re a good audience. They’re good because they want to improve themselves, but they’re also saying I’m okay spending money to improve myself. The people like on slick deals or fat wall it are not trying to improve their sales. You know, look at the bargain, which is fine.

And then in terms of the types of product, I think there’s probably about 3 or 4 categories that I think they’re the most appealing – I don’t want to do it. Health and fitness is a huge one. I’m not interested in that right now. I’m interested in my own health, but not running as a product. One of the groups that we found that people really like is starting your own business. There’s a lot of material about them, but there’s nothing actually showing like whatever and X products that I’ll give a little sneak preview that levels working on is literally making the business on the spot and showing how he makes this fresh and narrow.

It’s not like oh yeah, you do click there and you set up with that. It’s like I’m going to actually try to make $100, and I’ll show you exactly how I do it. And hopefully, you won’t fail, but maybe he will on that it will be an interesting lesson. I would say development has been surprisingly huge. I was blown away…

Clay: Like software development?

Noah: Oh my fucking God dude, people spent tons like Ruby, Phyton, iphone, Coco, like people spend a ton. One of the most surprising categories to me, the two other surprising categories I would say, designer stuff, so icons. Like our first big hit deal ever was Kernest, Kernest.com, and I don’t know. I can’t tell about his number, but that was our first like oh my God, we’re actually going to make money doing this, right, like this is serious money because we went from doing bundles to individual deals, and I can explain why because I think it’s pretty fascinating, but we started doing – we did it as a topography. Kernest is fucking icons and topography. I was like I don’t give a shit, but you know, never run a really long e-mail that showed why it’s valuable, and you know, people bought a lot of it. I was very shocked.

Now, it’s actually another thing that process the voice and the copywriting at such a valuable piece of the business. I never even thought of that, but then I got really obsessed with it, and so we made a key component. We actually even have like some copywriting products that we’ve created that do really, really well.

Clay: So if – Say you’d talked about it sounds like advertising, you’ve talked about has been a key part of your growth, and from what I’m hearing, and from my own experiences well, limited, but folks generally don’t break even on page traffic, in some cases up to 3 months, and in some cases, up to 6 months. And I’ve heard of some companies like not breaking even until 9 months out, but they still make a profit because they have acquired a customer, they get repeat sales like they get someone, you know, there’s a lot of benefits especially on the back end. How would you recommend someone who’s maybe done well with SEO or done well with, you know, Guest Post, or you know, social media, maybe JV or affiliate partnerships. They’re looking to get into paid traffic for the first time. How did they minimize their losses when you’re talking about a 3- to 6-month timeframe for recouping your investment? How do you think about that?

Noah: Yeah, that’s a great thing. And so the reason – So like what I did marketing in Mint.com. There was no advertising. It was very, very little. And the reason that was is because we thought content was actually – We thought the marketing really need to be more on the education because you’re giving us a lot of private information so it said, you know, let’s focus on making sure that they trust us before we ask for anything.

And so if you’re looking – And the reason I’m doing paid advertising so much at AppSumo, it’s very, very simple. It’s scaleable, it’s repeatable, it’s predictable. Go write a fucking blog post and see how much traffic you get. Now like, you know, I didn’t blog post. I did tons of guest post for AppSumo, and some like Tim Ferriss’ sites, I’ve got, you know, thousands of e-mails from subscribers, and some other sites like I spent the same amount of – Well, Tim’s I spent a lot of times, but other sites that’s been, you know, 5 hours writing a post and I get 10. I just spent a thousand dollars, I know exactly what’s going to happen.

And so the scaleable, repeatable, predictable was just – It’s not about – I will eventually get into SEO and PR and other methods affiliate, but it’s about what’s the most effective use of money and time, and so you’re trying to do advertising that I’d say the key thing is this. One, track what you’re doing. Don’t make – You don’t even build something super complicated, but like either create a custom link, use Bitly, Share A Cell, CPX, some tracking solution. Two, don’t spend more than a few hundred dollars a month, right. You don’t have to spend a lot. Even $10 a day will give you good ideas. I would try to be as narrow as possible, and go backwards. So I would go to like permanent sites and even try to do a sponsorship, so like what we did at Mint.com as PStand.com – PStand is a… He’s a buddy of mine, and Paul – We went to Paul and he has a lot of big nerd following, and so we were like “Dude, we will pay you $200 a month.” Did you just put a badge on your site, which is the sponsorship, but it’s still an ad that says ILoveMint.com, and just send this traffic, and that tutor ad must have gotten us thousands of e-mails.

Clay: Wow.

Noah: So you don’t need to go on Facebook and stuff. The reason I do Facebook and I’m trying to get Google because the scale is there.

Clay: Right.

Noah: But I’ve seen in the beginning what you’re really trying to understand is like start with really niche narrow sites. I would say tier B websites. Well like when we started to have customers, I did a lot of advertising on Read It.

Clay: Now?

Noah: Read It advertising is a lot more expensive and the quality is harder, and was never there, but it did give us a good base of customers for very affordable cost.

Clay: So you’re saying start out with maybe $10 a day, be prepared to lose money at first, and wait until you have a win, and then try and skill that when. Is that what you’re saying?

Noah: That’s exactly right. Like think about it as a buffet where you don’t need a fat ass, like thing of a buffet with a very small plate that has like 6 lots in it. And you can put 6 little pieces in, and then after you finish eating at the table, say you can pick one or two of those that you really like to go get for your bigger plate. Right. So that’s what we did. I mean we tried Google, we tried Facebook, we tried Read It, we tried Help a Reporter Out.

And in the phase 2, it was like literally, I was doing a lot of small medium ones, and now, at this point, when I’ve talked to Brandon who’s leading our growth team is I only want 3 or 4 channels max. I may want Google, Facebook, and maybe two other ones because like I want big. I want like, you know, we can really dump a lot, and was, you’re spending $150,000 now? Can I give you $300,000 to spend the same amount and get the same amount of quality, and he couldn’t, and so what we need is really effective channels that we can do that with. And so, you know, phase 2 is your advertising. Just keep it small like sprinkle the seeds and see what grows, but you have to do it – You have to be okay losing for a few months.

Clay: Yup.

Noah: The other thing I’d say is something that you’ve done really well, and I think others are starting to do well. Your conversions on free things are going to be higher than a paid thing. So get people in the door with your ads on a free activity. So like – And the best way to look at this, you know, is numbers, right. So most conversion rates on an ad, after they’ve clicked this like 0.5% to 2%, right. So that means if you have a hundred people – Like let’s say 0.5 are going to do it. I mean you need 200 people to get one customer. If you do a free thing, it’s about a 10% to 20% conversion rate. And now you’ve actually given them some value. So out of the hundred, you have 20 people to do it, right. And then can you convert this one out of that 20? Yes, it’s a really – If you can’t you’d probably not be in business and come work. Well it don’t work for anybody for me… of our competitors.

But that’s a point is that try to do free advertising because even though you want to make that money back right away, you still can. You could sell them things afterwards, but really give value ahead of time for your conversion rates from a mathematical perspective, it’s better.

Clay: Awesome. How do you feel about retargeting as a potential like training wheels for learning how to do paid traffic, like if you can’t get people who’ve been to your site already to come back and be possible positive on retargeting, do you think you should branch off into other forms of paid advertising or do you think that’s a good place to start?

Noah: Okay, I’ll tell you. Retargeting has worked for us, that and branded ads are the only two things I’m doing. The thing with retargeting is that it doesn’t grow your business so you start to get those customers there.

Clay: Right.

Noah: And it makes a lot of sense if you have a high margin in product, so if your product is like anything over $50 margin, you have to be retargeted.

Clay: Right.

Noah: Right, and then you could retarget at different stages, like one things that’s an interesting tip I’ll share with you is that if you find retargeting to work, you should go to your friends or other people and get them to target, to put a cookie on that person for you.

Clay: Right, totally.

Noah: So it’s like wow, they’re already retargeting. To me that works well. Let me find out that you will after I retarget to, and that actually could be your advertising mechanism.

Clay: Totally. So for example, like I did an interview on Mixer G that traffic converted for me, I should go to Andrew and say, “Can I pay you to put my retargeting tracking like cookie pixel on your site,” and then his audience are going to see my ads all over the internet, something like that?

Noah: Exactly. I mean that’s just one – It’s – Thing is like I’m not going to be able to give you that silver bullet or that gold ticket. It’s about exploring different activities…

Clay: Totally.

Noah: …to figure out what is the combination of what are you offering in the end, and where is the source of that traffic coming from. In my phase 1 and 2, you’re really just trying a lot of different sources out, and it’s okay, like we did, you know – The interesting thing is like I did sponsorships and advertising in partnerships so like people look like – Let’s say the audience was 3,000, and it’s not a bad thing now, but I probably wouldn’t do anything less than $50,000, and that’s just because we need to do things that we can scale with, and anything less than that just doesn’t help us.

Clay: What’s been the – You know, like we’ve heard a lot of pareto analysis in the start up community in 1820 and shit like that, what’s – It sounds like – I mean you’ve told us some of the 20% of the activities that create 480% of the results.

Noah: Yeah.

Clay: What are some of the 80% of activities that you’ve done that you’ve created 20% of the risk halts?

Noah: Yeah, that’s a really big question. I’m just trying to think of good stuff we’ve done. Oh, so we used to do bundles that seem to be working, but what happened, it was like, you know, it takes 6 months to do them or 3 months to put them together, and you know, we end up making like $5,000, and I’m like dude, I just spent fucking 3 months doing that, and then what we also knew – And then, you know, what we did is we took out the bundles and we make separate individual deals, and we make $5,000 from each one.

And there’s numerous people don’t want to buy bundles. Other things we did is we used to be like custom bundle. So let’s say Clay, you’re putting on a conference like 500 people. I mean like yeah. I mean in the beginning I’d hustle to get any, you know, subscribers to know about us if we could. And so, we would do custom bundles where I’d go and get bundles for you, and you’d give it away for free, and I would get the e-mails, but I would be like 200 people. And so the activity amount why just really resulted in shit.

You know, some of the guest posting stuff I would say is an 80/20 thing where I’m like – unless the site is very massive. I wasn’t getting expected results, and we’ll work about hilarity mentioned earlier. We spent a lot of time on that. Once we’ve done that thing…

Clay: Doing a deal everyday or would you put that in the same category as well by doing a deal every single day?

Noah: No, no, because we needed it to understand like the thing that I love about AppSumo is that we will study their evolution, and try to understand our customers in games like what do they really want? Where do they really need, and why are we doing this?

Clay: Okay.

Noah: The better we go on at that like so we needed the daily deals to finally understand. People don’t really want a daily deal. They just want two things they want solutions to their problems and they want to discover things that they didn’t even know could help problems. They think that they have.

Clay: Right.

Noah: And we wouldn’t have gone to them. So now, yeah, much respect with something. Oh yeah, we shouldn’t probably do – Like if we could do an e-mail once a week or never, I wouldn’t even view it that more. But as we’ve done this, it’s been 1820, definitely hiring some people.

No, I mean like I spent so much time hiring people and then like – You know, they like either didn’t or weren’t detail oriented or one person was really socially awkward. One person just didn’t have the skills to go to stage 3 so he actually quitted recently, but I didn’t say hiring is an 80/20, but hiring is also 80/20 where like if you spend a lot of time doing it, you get a great person, and that person could make all the difference, and we definitely had a few ones around that.

Clay: Interesting. Oh, this is really cool. What – You know, I’ve – I kind of noticed something just tracking stats in, you know, across a few different types of businesses. I’ve noticed that in a lot of cases, things that create a lot of desire often don’t create a flurry of social activity or ego gratifying activity. So for example, in my own personal business, the blog post that all right, that gets the fewest comments often result in the greatest number of sales. And you know, we will speak at a conference, and I have something for sale at the back of the room. It’s the talk that gets no applause that creates the greatest number of sales because people are apping because they’re going to the back.

Noah: I wish I’ve seen the Hal was here. Woof, woof, woof.

Clay: So what – I mean it sounds like you started out you were really prettily heavily invested in your personal brand. Now you’re not a very invested in that at all. You’re invested in AppSumo. What are some of the things that you feel like you’ve just to just put your ego aside in order to really scale the business? I mean that’s actually an incredibly like – I’m not trying to like lead the witness or anything, but I would just love to hear your thoughts on that in general because I’ve heard you talked about this kind of thing, and I thought your insights were pretty dead on.

Noah: I mean fundamentally, everything is back to like what’s best for AppSumo, and so I’ve definitely had some experience. It’s one of the ones that comes to mind right away was we had some partners that we were promoting. I don’t know if I’ve told you this story, but we had some partners we were promoting, and one of our key metrics is the seven partners that will work with us again because our whole business is based on promoting other people, so if we don’t have other people, we can’t promote anybody.

And so we agreed and we have it in contract, in writing that we would pay them X amount of dollars. And so after, you know, their promotion like 30 days later, we sent them a check, and I got a call, and it was like, “Noah, where’s my $10,000?” I was like, “What fucking $10,000?” Like “Yeah, but you said we do this,” and I was like “Let’s stick with the agreement because that’s what we agreed on, and the agreement said yeah, we’re going to pay you this amount,” which is what I paid him, and he’s like, “Well, that just doesn’t seem fair.” And so I got to one of the things where immediately I’m like my greedy, you know, comes out, and my – Some of my – My dad has a great rage. He also had this like you mother fucker. Yeah, he’s really accent.

You know, walking at the end of the day, I think I’ve set the example for the team and our culture in the business, and so I gave him the $10,000, and it’s like yeah, it’s $10,000 of fucking lot of money, but long term like – I think people – I think people run their businesses with like a two-week mentality like they’re going to go out of business in 3 months. It’s like the more that you could have that perspective of like shit, I’m going to work with this again. Guess what? We’ve worked with them again. We’ve made more then $10,000 working with them again, and they refer to other people. So that’s like we’re the good karma comes back.

Other thing with an ego it’s like – I don’t even know if it’s – I had my ego so up and down all over the place. I didn’t just appreciating not some shitty stuff. Let me just give you another story that I find was kind of cool. So we’ve been testing pricing on some things, and so, like some of the products are $69, and then $20, and then $79 just for some internal testing and seeing what people resonate more with, and one of the guys, you know, he e-mailed and he said – Oh, I got another story to talk about. One of the guys e-mailed and he was like, “Fuck you guys, you know, like you’re treating your new customers better than your loyal customers. That’s fucked up.” And I was like, shit, he’s telling me. Right. He’s definitely right.

And so I e-mailed him and I said, I just said, “Give me your phone number.” And I called him, and I let the team know about it, and I think, you know, you have stories like this that set the example for your business so that when you have like, you know, 2 years, you’re like, “You know, remember that time Noah did that or…” and people remember that kind of stuff, and so I called the guy, and you know, I told him straight up. I was like, you know, screw you man. Don’t use – No, no, I didn’t say that stuff. But I apologized and I try to understand like look, you know, we are testing it, and that is wrong, and you know what, we’ll try to make it right. We’re just still learning and this is the be-one of the business.

And I think, you know, what’s funny about that is the bar is set so low on service and taking care of your customers that like you can really do a most – a little more than nothing and people will appreciate it. So in terms of ego man, like I don’t know. Like I’m just kind of disconnected from the ego part like you’ve been speaking more often like it’s more about like where do I get my satisfaction.

Clay: Right.

Noah: And like this is just me selfishly, and the more satisfaction comes out of AppSumo growing. So whatever – like if it’s like a short-term, I have to take like suck my ego up, then yeah, I’ll do it. That’s it. That’s kind of that’s it. There’s something – I’ve got a lot more stories like that guy who called or we had one of our customers return $2,000. He returned every single one of his products.

Clay: Wow.

Noah: You know, it’s like a Friday night. I was out drinking, and I get an
e-mail that’s like yeah, I’m returning like 15 products or $1700, and I’m just like mother fucker, right, like I really want to go like find out where he is, I’ll fuck him up like – You know, I don’t want – I also don’t want some like I kind love people – I love people to refund that are good people like they’re not just taking advantage, getting our products because we’re digital products. They can keep them, but you know, I felt really taken advantage of, so it’s really hard in that situation, you know. The suggestion I got from college from my dean. I e-mailed the dean of the business school, in the undergrad business school. I e-mailed him and like 10 other people and I said fuck you. You’re wrong, all this shit. And he’s like Noah, let me just give you one piece of advice. Mark Hammerstein said any time you got to do something drastic, wait 24 hours, put it in the draft folder. And I have done that.

Because actually, really interesting about the refund thing – and I’ll finish up on that – is well, you know, so you kind of hurt my feelings, but what I did was actually ran all of our refund stats yesterday. I went and pulled everything. I pulled like – Let me open it up here. I pulled refunds by month, refunds by person, refunds by deal, the average refund sites, and what I found because, you know, my eye was like damn, how many people are refunding? Is this a bigger problem that I realized? What was interesting is the people who refunded the most are top refunders for the most part. They have actually made us a profit.

Clay: Cool.

Noah: Yeah, it hurts my feelings. I’m not going to lie. It fucking hurts my feelings. And you know I’m a sensitive guy, but at the end of the day, like it still was okay for the business. So as much as my ego was annoyed and like I sucked it up, it’s not as bad as I thought it was.

Clay: Yeah. Okay, so usually, when a company kind of blows up like you guys have…

Noah: That’s weird because I don’t feel like we’re nobodies.

Clay: Okay. Well, you know, I’ve heard a lot of people describe you, describe AppSumo as that, and especially, you know, in the startup world, in the startup scene, but usually, when that happens, the outside world looking in sees – They usually see like one of two things. Either they see like hey, Noah came out of like nowhere. AppSumo came out of nowhere, and they just have this unexplained like miracle-like success.

Then there’s another side that’s like oh, you know, fucking Noah built Facebook ads. He’s got this like magic bullet insider knowledge like no one else is going to be able to do that, and master magic traffic soars, and they’ve scaled that, you know. He’s been around forever, you know. They have this magic bullet. And I find that usually somewhere, usually, the truth is somewhere in between that. Why do you think that with the growth of so many daily deal sites that had your kind of model, why do you think you guys are one of the few that are working right now, and what was – like what was sort of that special edge? Why have you worked when a lot of other businesses haven’t? I’d really like to know that, and also, you know, just this perspective on this whole dichotomy.

Noah: All right, I don’t want to sound cocky or arrogant, but I will. So I’ve got that question from a few other people where they ask like, ‘How have you been able to succeed while your competitors don’t seem to be?’ And you know, obviously, the game – It’s still short in a game like we’ve only been around 2 years.

And so I think it’s probably two different – Two key things about what – three things, right: one, we give a shit, like I love our customers. I really and I talk to a lot of them, and a lot of them have the success stories from… promote, and that is fucking everything. So that to me is amazing. The two other things about why I think we’ve done well versus other people is two, I didn’t do we were doing well. I tested it, and I saw that people would actually buy it. I didn’t know if they’d buy those products. I think we’ve got lucky at this point that we’ve hit on, you know, the education kind of the angle, so tools and education for professionals. We got lucky that we’ve noticed that’s a thing that people want, and we can provide that for them.

And obviously versus like a Groupon or other daily deal sites, you know, they don’t have the digital magic of margin and digital distribution that we have, right, when we promote or sell your product, there’s no extra cost for you.

Clay: Right.

Noah: And then also just as a quick side note or a caveat, I don’t see this is a daily deal on Groupon anymore like he… we’re moving away from daily deal, like I just see this more as a destination for professionals to learn how to kick ass.

And the third thing, and this is the cocky part, you know, why we’re different than other people is because we fucking take it seriously, like we are hardcore about this, like I think a lot of other people, like I saw a lot of people come out and compete, and they still are. It’s fine. But you come out, it’s very easy to do one deal. Very easy to do two deals. It’s not very easy to do 365 days of good quality deals, like I’d seen other people put out shitty products and we don’t put out anything that I personally don’t stand by. And we’ve had it before. We put out a product where I didn’t personally like it. Not every product I have to love, but I want to say that, you know, yeah, we put it out because we think it’s good for some people, but I had the copyright right on the product like this product Noah thinks sucks, but Matt thinks is good, and so e-mail Matt. CC now if you think it sucks, and Noah will punch Matt. I think that copy is still there.

You know, it’s like we built out Algorithms. We’ve hired technology. We’ve taken it seriously. And I think, you know, that alone has helped differentiate us from the other people in the space.

Clay: But I see lots of entrepreneurs come on the scene who do give a damn about their customers and do take it seriously, and they haven’t had this success, you know, like – And so like when I hear people say stuff like what I hear Gary Vaynerchuck on stage, and he’s like, you know, because I hustled, and I’m like there’s a lot of fucking people hustling, like what – There’s got to be more to it than that, right. I mean what…?

Noah: Yeah, that’s a great question. I think – Well, so there’s…

Clay: I mean like Silicon Valley is filled with people who have like sold their fucking homes, you know, and given up everything that they have, and they’re working 18-hour days to make it work, like why do you think guys have done that?

Noah: I think there’s two pieces of it. I think there’s two pieces of it. So Taylor said this really interesting yesterday. It’s how much why do you have. How much why do you have? And so Taylor said this to me yesterday. I loved it. How much why you have means if the business turns south, if things go rough, if someone quits, if the money goes bad, how much like why are you doing this, like how much does this matter to you? Like the why? So like if you’re dead set on helping people professionally – I found out that my calling in life is helping people succeed professionally. I get a lot of satisfaction out of it and like if people do jobs they hate, I love yelling at them. If people are doing their businesses and I can assist in some way, I enjoy doing that. It’s something I truly passionately do so my why is very strong. Other people’s whys are weak and shit. My why in my last business, we’re doing a $150,000 a day in revenue. I did not give a fuck. I didn’t care at all. My why was nothing. My why was to make money, and when you have a very weak why, it’s easy to quit. So that’s part one. Your why must be strong. It sounds like a Yoda thing.

The second piece of it is yeah, there are – Well, I’ll do three, but I think two is skills and three is luck. So luck, you know, look at Zuckerberg at Facebook when I worked there. He was lucky that he got in the idea after a time when, you know, things worked out the way that – He was at Harvard, and they had a close school, and there was Facebook around. So that was luck that the time worked out, but the skill was that could you do 10 years of patience and execution? Fuck, no. Very, very few people can and surround yourself with the right people. So I’d say that people that are failing maybe have not had the luck or they’re lacking on the skill side, even if they really give a shit.

Clay: Right. And what do you – What would you say or the skills that you found are most useful? Like marketing seems like a strong suit of yours.

Noah: The what?

Clay: Like marketing, data analysis, knowledge of paid advertising, like what specifically?

Noah: Yeah, it’s not even that because that kind of came afterwards. I don’t know how to explain it for other people in terms of what makes it work. For me, what I feel like very for some reason I feel pretty good at is understanding human needs. Like more than anything, I try to find products and businesses that satisfy myself, satisfy myself and then there’s other people out there that want it. So conferences was – I wanted a conference that I can go to and there are probably other people like me. And everyone has personal finance problems. I love personal finance. Now let me help other people get it. These same things and AppSumo is like, you know, these are fucking cool products. I use them. How do people find out about them? I don’t know. Let’s solve that.

And so I think I’m pretty strong in just understanding that, and I’d say the second thing for me that I found and you past it as synthesizing. I find that I’m actually pretty – This is just me. I don’t know if others are – But like I may a little bit take from books like one or two key things, and then actually apply them, or like I can listen to you, or I can watch information or talk to writers, and then pick one or two that are actually applicable.

And the third thing that I’d say helps make people successful, this is probably the key one that I know it sounds really cheesy. It’s the easiest one of them all, but I get shit done, and I know when people like even say that like oh, I get things done. I make things happen. They don’t. They fucking come home afterwards. They look at their computer. They play on TV. They go drink. They’re lazy, and you know, one or two bad things happen, and they have no persistence.

Clay: Right.

Noah: And guess what, I’ll fucking keep doing it, right. That’s just the difference, and if you don’t want to do that, that’s fine. Go work for someone else.

Clay: Okay, okay, I love that. Okay. That to me I think is actually incredibly, incredibly, incredibly important. I mean you’re calling up your customers when they’re saying, “Hey, you’re doing this, but not this.” You call them up immediately. You’re asking them to call you. You know, one thing like with my own students, like we have a webinar right now that’s just crushing it, right, and we spent 3 months creating that webinar, and I’ve never seen a higher conversion rate on anything, but we spent 3 fucking months doing it, and people come to me and be like yeah, I spent today on my webinar, and it’s just not converting it the way I wanted to, so I don’t think webinars work or something like that. So it sounds like someone could say that about the daily deals site, and you could be like well yeah, we try to ponder different things.

Noah: Yeah, we did. Look, I’ll tell you. Our revenue in our business has been flat for 4 months, and I think a lot of it are people would maybe just feel like all right, well, we’re going to keep doing what we’re doing, and we’re not. We’re kind of – We’re fucking re-jiggering shit to see how do we, you know, get it to that next level, and I think one of the things that – One thing that you’ve said right there, which is fascinating and really fascinating, and I think we’re safety from iwillteachyoutoberich.com or does this so well where he spends 6 fucking months making a product.

Like, you know, think about that as an investment. Most people – The problem with Americans – I don’t know about international – we’re fucking lazy, and we want things to happen with short cuts. That’s where we like go to certain products and things that are oh, how to cheat, how to hack, how to get ahead. They’re not willing to invest the time to learn why things are, and to make it at that level, but like takes it to that level, and that’s why he has the success and the results that he does.

Clay: Yup. Yup. I have a friend who’s doing incredibly well, and he’s like, you know, if I could double the opt-in rate on my squeeze page I’d double my revenue as a business so I’m spending 2 months working on a squeeze page, and I think that’s the way – I mean that’s the kind of thing that you’re talking about here is being able to spend an ordinate amount of time on a task that most people want to get done in an evening or on a day, and I think – Honestly, I think that most people, they don’t feel like they have permission to do that. They don’t know that successful people are doing it, and they’ve read so much about shortcuts that they believe that it should happen in an afternoon or in a day.

Noah: Yeah, I really move the 6-month principle, and the 6-month principle is that like it’s going to stop after 6 months, and if you can handle 6 months in it then you’re ready for this. If you’re not then you shouldn’t be doing it, and that’s okay because the problem is you go to Mixergy, which is I love, and I love Andrew, but you go to a lot of some sites that have like, you know, overnight success, it just happened, but it’s like 10 years of failure or 6 months of like this is really tough, right.

Clay: Awesome. Dude, this has been killer. Is there any question that I should have asked you that I haven’t or anything else you think needs to belong in this interview?

Noah: No. I’m going to go have some egg whites and veggies, trying to stay – Hey, I would say the big thing, two things: one, if you’re not signed-up for AppSumo…

Clay: Go to AppSumo.com.

Noah: …the website of AppSumo.com. And then number two thing, if I can live with anybody is that I find out my work life and my professional life is improved when I improve my health. And so I feel like a Jewish grandfather, but like I’m trying to look…

Clay: Eat your veggies.

Noah: What’s that?

Clay: Eat your veggies.

Noah: Yeah, get them… get them. But you know, the big thing I’d say to people is that if you can improve your health even having some discipline like this was my new favorite word on how this one improves your health, your actual startup, your business, your stage, stage 2 will actually get better.

Clay: Awesome.

Noah: I was going to cut on an interesting thing that’s happened for me more recently.

Clay: Awesome. Noah, this has been great. Thank you for being the first person in this inaugural interview series. I appreciate your time. You’re a busy man. You’re hard to get hold of, and I know you charge quite a bit for speaking fees, and that time with you is scarce, so I really do appreciate this. I appreciate you taking the time.

Noah: Awesome.

Clay: Yeah, thanks for being here today.

Noah: That’s fine.

Clay: All right, take care.

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  • http://www.youtube.com/profile?user=norxcontacts norxcontacts

    [..YouTube..] Woah, thanks for dropping a massive value bomb!

  • norxcontacts

    Woah, thanks for dropping a massive value bomb!

  • http://www.facebook.com/epocson Matt Turner

    Loved the interview.  Interviews with people like Noah are very insightful, not only for internet marketing, but business in general.  Great stuff!

    • http://www.marketingshow.com Clay Collins

      Dude, great to see you here, Matt! Thanks for stopping by.

      • http://www.facebook.com/epocson Matt Turner

         Hey no problem.  I think I may pull a Tyler Durden on the next episode.

        • http://www.marketingshow.com Clay Collins

          Nice.  But what does that mean?

  • http://pulse.yahoo.com/_LHAHLRWGYTEPM2D6CRMKQZXGUY Jason

    great interview.  Does Noah have good demographics of his customers so he knows who to target w/ advertising?

    • http://www.marketingshow.com Clay Collins

      My sense is that AppSumo has done a lot of demographic testing on Facebook.  Of course this kind of testing comes at a price.

  • Eden

    Test, measure and hone in on what’s working – then replicate. How simple is that?

    • http://www.marketingshow.com Clay Collins

      It’s pretty simple to say.  And a lot more difficult to actually execute.  Most folks don’t even have the capacity or traffic to properly test.  And even more folks get stuck trying to figure out what to test.

  • http://BrownstoneFitness.com/ Hans

    This was a really helpful interview.  I’m starting a business at an age when other friends are planning for retirement.  This is a great resource for an old dog learning new tricks.

    • http://www.marketingshow.com Clay Collins

      You’re far from being an “old dog,” Hans.  And you’re in the right place.

  • http://www.facebook.com/nathalielussier Nathalie Lussier

    I love how Noah talks about the benefits of keeping yourself healthy, and how that impacts your business. I can definitely concur with that. :) 

    I really enjoyed this interview, especially the parts about testing and taking a long time to fine tune offers, ad buying, and hiring!

    • http://www.marketingshow.com Clay Collins

      Awesome.  I think the staying healthy part is key.  I used to try and do all kind of complicated things to increase my productivity.  And then I just starting running for 30 minutes each day and probably increased my productivity by at least 30%

  • http://www.facebook.com/mhardenbrook Michael Hardenbrook

    As always, great info from Clay and Noah….so I decided to share it as a thanks, http://roguesumo.com/noah-kagan-and-clay-collins-on-business-failure-marketing/

    • http://www.marketingshow.com Clay Collins

      Thanks, Michael.  Are you officially associated with AppSumo?

      • http://www.facebook.com/mhardenbrook Michael Hardenbrook

        We’re friends and one day I said “I should review your products, I use them and think people would enjoy it” ….. I shot this link over to him this morning and got a very typical response “hot sauce” haha

        • http://www.marketingshow.com Clay Collins

          Nice.

  • http://twitter.com/SuperflyRealtor Brandon Harris

    big fan of appsumo and you too Clay.  Working on my startup and I would have liked more ideas on how to gain new customers when your are first launching.  Great stuff though. I know you chatted about facebook ads and newletters but it’s still a big vauge.  

    • http://www.marketingshow.com Clay Collins

      Thanks for the feedback.  I’ll try and hit on how to gain new customers when you’re first launching in future episodes.  Thanks for the feedback.

  • Twonickel.com

    Awesome stuff Clay…Noah is getting it done big time! I’m a AppSumo subscriber now…should have been a long time ago when I saw that op-tin…shit. I love these resources…I thought it was some groupon affiliated ad….damn. I’ll be looking forward to the failures cast he is proclaiming. We all want to know what was his first successful camps and where do you get the flow (money) to scale like he has from the beginning.

    • http://www.marketingshow.com Clay Collins

      Glad you’re all signed up now.  Appsumo is a great resource.

  • http://www.discountcleaningproducts.com/ Mike Kawula

    Sweet interview. Have heard Noah on Mixergy, but this was just great. Loved the part on moving from Phase 1 with taking something that is working and Scaling it in Phase 2. We’ve had such difficulty with that part of our business that really found the discussion helpful! 

    • http://www.marketingshow.com Clay Collins

      Awesome that you”re ready to scale something that’s working.  Finding something that works is the hard part, however: scaling it can be a logistical pain, but for most people, if you have something that works you’re 75% there.

  • Chris

    Clay – that was great. Noah has a great way of communicating transparently. I almost clicked off when I saw how long the video was, and tried to get up a few times during the interview to go make myself breakfast, but then he’d say something amazing and I’d be back. Never even made it to the kitchen door!

    • http://www.marketingshow.com Clay Collins

      Yeah . . . I dig his transparency also.  It’s probably the main reason why I wanted him as the first person in this interview series.  I’m glad you like this, Chris.

  • http://www.mangodigital.com mangoman

    Thanks, Noah. Thanks, Clay. I ended up running for a notebook and taking notes!

    • http://www.marketingshow.com Clay Collins

      You’re welcome.  And I agree: Noah totally delivered with this.  Thanks for the encouragement.

  • http://www.facebook.com/karolyn.mckinley Karolyn McKinley

    Great interview!! Love App Sumo, so was intrigued to find out how it was created and developed. So much great, actionable info – thanks Clay and Noah!

    • http://www.marketingshow.com Clay Collins

      I’m glad you found it actionable.  That’s really important to me.

  • http://www.doitmyselfblog.com GlendaWH

    Great interview, Clay. Very meaty. I do, however, take issue with Noah’s comment that tying speed is linked to intelligence. I type with only my left thumb due to my physical disability. Because of my slow typing speed, I have found other ways to increase productivity to compensate. By using typing speed as a hiring criterion, AppSumo would miss out on my other knowledge and expertise that might benefit the company. Be careful that the metrics used are actually measuring what you think they are.

    • http://www.marketingshow.com Clay Collins

      Hi Glenda! I’m glad that you enjoyed this.  I think what Noah was saying was that statistically speaking . . . across large datasets and across large groups of people . . . that there is a correlation between intelligence and typing speed.  Of course, with any correlation, there are always outliers: http://screencast.com/t/GdLAeQx5S  And of course, correlation does not equal causation.  For example, across a group of 100,000 people, there’s probably a correlation between height and basketball ability.  But there are always very notable exceptions to the rule (like Tyrone “Muggsy” Bogues).  There is a large correlation between intelligence and attention span.  Fortunately, that doesn’t mean that I (an an *individual* with a short attention span) have low intelligence.  It just means that when data from hunders of thousands of people are analyzed, that there tends to be a correlation.

      Also, I’m guessing that AppSumo uses typing speed as one of MANY factors in hiring someone and that they’d take extenuating circumstances into consideration.  Of course, I can’t speak for Noah.

      Anyway, from looking at your writing, you’re clearly a highly intelligent person.

      I hope this makes sense.

  • tomshark

    The interview kept getting deeper and deeper; really great questions Clay and great answers Noah. My main take away: “The Why must be strong!”

    • http://www.marketingshow.com Clay Collins

      That’s a great takeaway.

  • Jaxi

    Okay, so I had never heard of appsumo – so this alone was cool to learn! :)  

    Overall, this was such an incredible interview! The insight from just his personal stories were just as valueable as the business focus. (especially the ones he told in the very beginnning). I took a lot of notes! He is very down to earth for all his success!

    There was not much in this interview I could say ‘I already knew’ – only a few things. And I could list tons of take aways, but the 6 favorites of mine were:

    1. focus on 1 metric (his was email)
      
    2. expect about 6 months of ‘failure’.
    – Specifically, this was very huge for me because all we hear all the time is ‘it’s not easy’ and ‘it will take time’ and you ‘won’t break even for a while’, etc. But no one said this. And this was actually comforting for me – so now I am better prepared and not as concerned.

    3. some people pursue their business with the mentality that it might not be there in 6 months and aren’t really willing to put in the dedication or the time4. I really, really get – like at an entirely new level – HOW much dedication, work and time you have to do, have. I always knew it was tremendous and I already knew about the why, but just your example of your 3 month webinar and that guy’s squeeze page. Some would say you are spending too much time on these things -that you are obsessing or trying for perfection. And that is what I would be more apt to believe. But now I understand that there is a difference. Please thank him: He just excited and challenged me to raise the bar of my own work dedication/ethic when I already know mine is pretty high (now realizing it looks small compared to his)5. Find your win in specific areas of your business and scale it.6. His hiring tips were super! I don’t have plans to hire anyone right away, but if I did, especially the point about hiring someone who can take you further, not just keep you where you are now.I am very grateful for his time and his willingness to be open and share with all us. Thank you for creating this series!

  • Jaxi

    you might better be able to read the end of my posting here – not one long paragraph :)

    4. I really, really get – like at an entirely new level – HOW much dedication, work and time you have to do, have. I always knew it was tremendous and I already knew about the why, but just your example of your 3 month webinar and that guy’s squeeze page. Some would say you are spending too much time on these things -that you are obsessing or trying for perfection. And that is what I would be more apt to believe. But now I understand that there is a difference. Please thank him: He just excited and challenged me to raise the bar of my own work dedication/ethic when I already know mine is pretty high (now realizing it looks small compared to his)

    5. Find your win in specific areas of your business and scale it.
    6. His hiring tips were super! I don’t have plans to hire anyone right away, but if I did, especially the point about hiring someone who can take you further, not just keep you where you are now.I am very grateful for his time and his willingness to be open and share with all us. Thank you for creating this series!

  • Jaxi

    okay, just a side note: 

    you always say ask them to do only 1 thing in each marketing piece you send out – just one call to action – but you asked us to do 2, (ha ha :)  so I get now why you really should only ask for 1 – because I almost forgot the first one (probably b/c this interview ROCKED)

    James’s new voiceover was really great with the background music :)

  • http://www.HireYourVirtualAssistant.com Owen McGab Enaohwo

    Dude the hottest part of this conversation for me was when yall where talking about Retargeting. I have started using retargeting for my site and now that I have a niche focus client based I am seeing things a lot clearer now. I am curious any ideas on how to get folks to allow me put my retargeting code on their site?

  • http://www.HireYourVirtualAssistant.com Owen McGab Enaohwo

    Also clay you should start using Wistia for your videos because if you were you will see that I reviewed the retargeting section of the video about 6 times (<<<— insight on future marketing show episodes)

  • http://www.HireYourVirtualAssistant.com Owen McGab Enaohwo

    Also I love this angle of interviewing folks with 7 figure or more businesses because the perspective that they will bring to the table is definitely going to be more around scale and delegation (<<<— which I want to hear more of)

  • http://www.youtube.com/profile?user=marshmallowcreme marshmallowcreme

    [..YouTube..] clay is the man

  • marshmallowcreme

    clay is the man

  • http://www.youtube.com/profile?user=sefdogsefdog sefdogsefdog

    [..YouTube..] This channel is a beast.

  • sefdogsefdog

    This channel is a beast.

  • http://www.youtube.com/profile?user=marketingshowtv marketingshowtv

    [..YouTube..] Thanks for the kind words, sefdogsefdog, marshmallowcreme and norxcontacts! Definitely stay tuned for more great episodes :)

  • marketingshowtv

    Thanks for the kind words, sefdogsefdog, marshmallowcreme and norxcontacts! Definitely stay tuned for more great episodes :)

  • http://www.youtube.com/profile?user=JasonCWaite JasonCWaite

    [..YouTube..] this interview is golden. thank you for your two massive value. just subscribed to appsumo[.]com
    jason waite
    paris, tx.

  • JasonCWaite

    this interview is golden. thank you for your two massive value. just subscribed to appsumo[.]com
    jason waite
    paris, tx.

  • http://www.youtube.com/profile?user=marketingshowtv marketingshowtv

    [..YouTube..] thanks for the comments, guys! glad you enjoyed this :)

  • marketingshowtv

    thanks for the comments, guys! glad you enjoyed this :)

  • http://www.youtube.com/profile?user=marketingshowtv marketingshowtv

    [..YouTube..] Nice. They do a great job over there.

  • marketingshowtv

    Nice. They do a great job over there.

  • http://www.youtube.com/profile?user=marketingshowtv marketingshowtv

    [..YouTube..] Awesome. Thanks for subscribing.

  • marketingshowtv

    Awesome. Thanks for subscribing.

  • http://www.youtube.com/profile?user=marketingshowtv marketingshowtv

    [..YouTube..] Nice. Who wrote this?

  • marketingshowtv

    Nice. Who wrote this?

  • http://www.youtube.com/profile?user=marketingshowtv marketingshowtv

    [..YouTube..] Absolutely. We try and do this as often as possible.

  • marketingshowtv

    Absolutely. We try and do this as often as possible.

  • http://www.youtube.com/profile?user=marshmallowcreme marshmallowcreme

    [..YouTube..] Same guy sending you amazing music on Spotify.

  • marshmallowcreme

    Same guy sending you amazing music on Spotify.

  • http://www.youtube.com/profile?user=JasonCWaite JasonCWaite

    [..YouTube..] Also, would add. Income is great when targeting successful people. Would also maybe differentiate what type of income do they earn. Is it a residual recurring income? Or is it a more maintenance type income like selling packages and then having to resell them? Huge difference.

  • JasonCWaite

    Also, would add. Income is great when targeting successful people. Would also maybe differentiate what type of income do they earn. Is it a residual recurring income? Or is it a more maintenance type income like selling packages and then having to resell them? Huge difference.

  • http://www.youtube.com/profile?user=mattcoffy mattcoffy

    [..YouTube..] Dont Be A Fat Ass- NOAH is the best. GUYS KILLER show .. I am now a huge fan, you have my heart!

  • mattcoffy

    Dont Be A Fat Ass- NOAH is the best. GUYS KILLER show .. I am now a huge fan, you have my heart!

  • http://www.youtube.com/profile?user=marketingshowtv marketingshowtv

    [..YouTube..] Noah *IS* awesome. And I’m so glad that you liked this interview. Thanks for the comment.

  • marketingshowtv

    Noah *IS* awesome. And I’m so glad that you liked this interview. Thanks for the comment.

  • http://www.youtube.com/profile?user=marketingshowtv marketingshowtv

    [..YouTube..] Excellent point, Jason. I completely agree.

  • marketingshowtv

    Excellent point, Jason. I completely agree.

  • http://www.youtube.com/profile?user=marketingshowtv marketingshowtv

    [..YouTube..] Awesome! Hi, Marhsall. Thanks for the great tunes.

  • marketingshowtv

    Awesome! Hi, Marhsall. Thanks for the great tunes.

  • http://www.youtube.com/profile?user=aplexi09 aplexi09

    [..YouTube..] Great interview, Noah, you bring up many valid and interesting points that I have been hearing from a number of sources. It’s seems the truth resonates over times (reading “Think and Grow Rich”) 1. Determination & drive (Your version of Why)

    Physical health + Mental Health = Success.

    Thanks.

  • aplexi09

    Great interview, Noah, you bring up many valid and interesting points that I have been hearing from a number of sources. It’s seems the truth resonates over times (reading “Think and Grow Rich”) 1. Determination & drive (Your version of Why)

    Physical health + Mental Health = Success.

    Thanks.

  • http://www.youtube.com/profile?user=marketingshowtv marketingshowtv

    [..YouTube..] Well, physical and mental health to not automatically equal business success. There are plenty of mentally and physically fit who have determination but no profit. It’s by no means that simplistic.

  • marketingshowtv

    Well, physical and mental health to not automatically equal business success. There are plenty of mentally and physically fit who have determination but no profit. It’s by no means that simplistic.

  • http://www.youtube.com/profile?user=freshcoastrider freshcoastrider

    [..YouTube..] Hi Clay, I enjoyed this video, as Noah has a way of cutting through the bs of business jargon to the nitty gritty of what he did to get app sumo to where it is today. I am very interested in seeing the future guests in this series. Brilliant idea mate.

  • freshcoastrider

    Hi Clay, I enjoyed this video, as Noah has a way of cutting through the bs of business jargon to the nitty gritty of what he did to get app sumo to where it is today. I am very interested in seeing the future guests in this series. Brilliant idea mate.

  • marketingshowtv

    So glad that you liked the interview, Frescoastrider. If you’re interested in other folks in this series, then please watch the interview with Brian Clark. You can find it in my channel (this channel).

  • Merino Wool Blanket

    good point!

  • http://www.youtube.com/profile?user=marketingshowtv marketingshowtv

    [..YouTube..] What’s the good point?

  • marketingshowtv

    What’s the good point?

  • Murali Govindaswamy

    dude.. let him talk. You ask him very long winded questions :)

  • marketingshowtv

    Sorry. I’ll try to crack down on that in the future.

    –Clay

  • borweb

    Great content! I think some questions were unnecessarily long.
    Compare these 40 second questions to the 6 or 7 sec questions Andrew Warner makes.
    Also, at times it seemed as if you were just wanting for him to stop talking so you could ask the next question you had planned…

  • Rishab Mehra

    Awesome stuff, very relevant questions and answers

  • marketingshowtv

    Thanks, Rishab! Noah does a great job here IMHO.

    –Clay

  • Grant Guo

    Great conversation, clay and noah!

  • marketingshowtv

    Thanks, Grant!

  • tolfguy

    @21:37 I died laughing