A Product Market Fit Show | Startup Podcast for Founders
00:08:59 · Rand Fishkin
[00:08:59] S1: That's, yeah , Mozilla was one of them as well, so , okay. Okay . So I think the only two that kind of survived that long era were Mozilla and Moz <laugh> , which is funny. Uh, basically I started publishing there and we earned quite an audience and that, that sent us some consulting business for SEO, which is what the business transitioned into . So it went from web design fully over to SEO. Uh, and then in 2007, we had built some software that we were using internally for ourselves to try and like, make our processes easier and better. Essentially. I, you know, I really wanted to share that with our community. All these people who were reading the blog. This was sort of a pre, it wasn't pre-social media, but it was pre popular Facebook, Twitter, LinkedIn, all that kind of stuff. And so I , uh, convinced our developer, Matt, to basically build a PayPal paywall on top of the software that we had behind the scenes. We launched that in, at the start of oh seven, and by the middle of that year, it was already doing more revenue than the consulting business. And that is not because the software was great. I don't think any, no one would say it had product market fit. Like it was, it was crappy little tools that, you know, were barely better than doing it manually. But everyone who was doing SEO was reading our blog. And so we had, we had the audience, and that audience first approach was just incredibly powerful, right? Because they knew us, they liked us, they trusted us. So when we published some software, they were like, oh, yeah, I can, I can do the same processes that the Moz folks have been teaching me and use their software to make some of them easier , uh, and faster. And there weren't a lot of, you know, web cloud-based solutions for , uh, doing SEO. There was no virtually no software as a service in that field at all. And Moz took off. So by the , uh, I think we did about $800,000 of revenue that year, maybe a little bit more, and more than half of that, like 450,000 of that was the software. And that's when Ignition Partners , um, and Curious Office came in and invested at 1.1 million, the TechCrunch. And , uh, w uh , Wikipedia numbers are wrong. I have tried to convince them to change them, but <laugh> , they're, they're like, we can't trust you. You're not a credible source .
00:11:14 · Pablo Srugo, Rand Fishkin
[00:11:14] S0: Who are you? Right? You're not relevant to this <laugh> , you just made the company. [00:11:18] S1: Yeah , yeah. Anyway, we raised $1.1 million, thankfully the cap table and like all the legal docs represent this accurately. Uh, and then basically off to the races, right? We, we used, we hired a couple of engineers , um, that I knew through my wife Geraldine. Um, she had, she had gone to school with , uh, with this really smart guy named Ben. And they built a, an index, a a link index of the web over the next year. And at the end of 2008 , uh, we launched that. It was originally called Linkscape. I think the product inside Moz is now called, I'm not sure what they call it, but it essentially crawls the web and, and shows all the links that point to all the other sites on the web similar to how Google does it on their backend. And of course, this was like a big innovation and, and challenging product to build at the time, expensive product to build. Um, although, you know, if you think about $1.1 million in today's world, you're like, what? That's no money at [00:12:11] S0: All. By the way. Like back then at that point, did you understand what you were getting into? Like, did you kind of have this idea of like, wow, this is really taking off. Let's go create a unicorn, let's raise some money. Or was it just kinda like one step in front of the other, oh, they're offering me money, bit of a no brainer. Like, let's
00:12:11 · Pablo Srugo, Rand Fishkin
[00:12:11] S0: All. By the way. Like back then at that point, did you understand what you were getting into? Like, did you kind of have this idea of like, wow, this is really taking off. Let's go create a unicorn, let's raise some money. Or was it just kinda like one step in front of the other, oh, they're offering me money, bit of a no brainer. Like, let's [00:12:24] S1: Take it. I'm very grateful. I don't think the term unicorn even existed. Like no one had used it yet. Um , there wasn't a focus on that. There was, you know, it was the venture capital world kind of that was left over from the late nineties. And so the, the idea was, you know, hey, build something big , eventually you're gonna sell it or you're gonna IPO But there, there wasn't a focus on an exact amount. I think a a billion dollar startup still felt semi ridiculous to most people, which was nice as [00:12:52] S0: It probably should. Yeah. Like that . Yeah. [00:12:54] S1: As it should, as it should. Even a hundred million dollar start startup should feel ridiculous to most people. 'cause the, the odds of that happening are so vanishingly slim. And it's, it's weird to me that we all talk about this thing that's less likely than most lottery wins. So I don't , you know , I don't totally love it. But anyway, so , uh, Moz , you know, basically from whatever, oh six to 2014 doubles year over year , every year. Hmm . Like , it just dun , dun , dun , dun , dun dun . And so gets to it goes [00:13:22] S0: To what? Yeah, like 50 million ish
00:13:22 · Pablo Srugo, Rand Fishkin
[00:13:22] S0: To what? Yeah, like 50 million ish [00:13:24] S1: When I left. So , no, it got to, I think it got to like a little over 30 million in 2014. And then essentially growth was slowing, got to like 40 million maybe the next year, a couple years later, and eventually got to 50. Okay . But it was, at that point it was growing, you know, sub 10% , um, year over year. So it really plateaued in, in 2014 , uh, I had a deep bout with depression and stepped down as CEO and promoted my longtime chief operating officer to the role. Um, and Moz was, I mean, I say struggling, like, it , it wasn't really, it was, I was like, you know, I was very upset that we were only growing 50% year over year at that point, either 13 or 14 had slowed to like 50%. And that was, you know , very upsetting to me. <laugh> , I remember , uh, Brad Feld , who had come in as our investor from Foundry Group was like, you're the best performing company in our portfolio. Like, it's okay. You're doing great, man. <laugh> , yeah , [00:14:21] S0: 50% of those numbers is, is meaningful , uh, revenue growth for sure.
00:14:21 · Pablo Srugo, Rand Fishkin
[00:14:21] S0: 50% of those numbers is, is meaningful , uh, revenue growth for sure. [00:14:25] S1: But we had entered the era of the unicorn, right? So , and we had raised another $18 million in 2012, which, so now, now we are really obligated to, how do we get to a hundred million dollars in revenue growing at 20% with 80% plus margins, right? That was like our, our, our goal. And we, the margins were quite high. I think they were even higher than 80%, which is great gross margin. But , um, the growth rate was slowing, and it was this like, nope , growth rates slowed too early. And so there were two competing opinions inside the business. One from most of the board , uh, and the new CEO was that SEO was tapped out. There basically wasn't enough of a market in SEO to build a a hundred million dollar a year company. And the other opinion, which, which was shared by myself and some other people, mostly lower down in the company. And , and the , on the SEO side of things was SEO is an absolutely huge market, but we're getting our lunch eaten by these other new competitors, and we need to start building better features and making the software more useful and updating the UI and all that kind of stuff. [00:15:27] S0: What were some of the big competitors coming up at that point?
00:15:27 · Pablo Srugo, Rand Fishkin
[00:15:27] S0: What were some of the big competitors coming up at that point? [00:15:29] S1: The two big ones were SEMrush and arus , but there were another, another 10 or 20 software as a service businesses that were all sort of, you know, nipping at heels and getting to the five to $10 million revenue size. But SEMrush, I think in, maybe it was 20 17, 18, somewhere around there, I think they went public and their numbers showed, you know, like $120 million in revenue a year. And they're way over that now. [00:15:51] S0: Yeah. What are they now? I'm just looking at a market cap , $2 billion company. There you go. <laugh>. So that was the opportunity. [00:15:57] S1: If I had been more persuasive and a sort of better CEO , um, and remain CEO and like done a great job, I, I think Moz could have been in a, in that position or a similar position. Right? Certainly in 2013, for example, if you were to survey 10,000 SEOs and say, what software do you use and what , what , what do you recommend most Moz would've been number one and M 20 18, 5 years later, Moz was probably number three. Um, and today, I don't even know if it's number five.