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This is a transcript of the Bowery Capital Startup Sales Podcast – How Marketing Drives Success In Your Early Days with Mitch Wainer
MB: Episode two of the Bowery Capital startup sales podcast. Hey guys, I’m here in the studio with Mitch Wainer from DigitalOcean. Mitch has a pretty illustrious career on the marketing side. For those who are not familiar, he’s the founder and CMO of a company called DigitalOcean. Mitch, tell us a little bit about yourself just to let the listeners know who you are and what your background is.
MW: So I spent the majority of my career working in the digital ad world for an agency on West Coast. I was working here on the East Coast, remote consulting Fortune 100 companies on their digital marketing strategies, SEO tactics, SEM tactics, social media content, as well as branding. So I escaped that scene and moved to the startup world, met the co-founding team of DigitalOcean, and we started working on the side project called DigitalOcean.
MB: So you were still at your current job.
MW: No, we… I left my current job.
MB: Got it.
MW: And what… the story goes is I found a job post in Craigslist for marketing director for this managed hosting company and the two brothers, Ben and Moisey Uretsky, had founded this managed hosting company. It’s doing about six million in annual revenue at the time, five, six million. So I came on as marketing director and together, we’re working on this side project called DigitalOcean, got into TechStars Boulder. The summer of 2012, we went out for three months, graduated, and then eight… about eight months later, we raised from IA Ventures, our Seed round, 3.2 million.
A year later, we raised… not even a year later, eight months later, we raised another round of Series A from Andreessen Horowitz and IA Ventures for three… 37.2 million. So company has been growing exponentially. We have over a hundred employees now and we have over 170,000 customers in over 200 countries around the world. So we… and our global footprint has expanded drastically. We have data center locations in Amsterdam, London, San Francisco, New York, Singapore, and looking to expand further into other markets around the world. It’s been a rocket ship and we’re just trying to hold on.
MB: Yeah, it sounds like it. I mean, so I guess the topic of discussion really is thinking about how marketing relates to a business early on, a SaaS business early on, and I think you guys in particular have paid a tremendous amount of attention to marketing, really blending this direct and indirect selling effort. Can you maybe start with how you guys launched and what was the genesis behind the ideas you had and what was the results and things that happened when you first got DigitalOcean off the ground?
MW: So just to give everyone more context on how we acquired our first 50 customers, we demoed at New York Tech Meetup the DigitalOcean MVP product and we gave out a $50 promo code to the audience, and that’s how we acquired our early adopters. Then we started to interview those early adopters thereafter, really understanding the use cases on how they use DigitalOcean, who they were as individuals. We found out very quickly that developers really love using our product, software developers in particular, so developers that write code.
MB: And there wasn’t much friction reaching out. You just sent them an email and said, “Hey, I want to talk about how you’re using the product.”
MW: Very little friction. So word of wisdom, don’t be afraid to contact your customers.
MW: They’re more than willing to… especially the early adopters. They’re your brand advocates, so they’re more than willing to answer your questions and help guide your business as you move forward.
MB: And so okay, so you guys get 50 customers. You really start talking to them and what were some of the early learnings that you found out or things that you said kind of, “Wow, I had no idea that people were thinking this.”
MW: So I mean, the positioning I think is very critical for your business like what… you have to… you have to understand your differentiators and your value proposition pretty early on, like why you’re going to win in your industry. Once you nailed… so after interviewing our early adopters, we found out what positioning we need to take in the market and that was the positioning of simplicity. So the pain felt in the industry by developers was that Amazon and Rackspace were too complicated for the individual…
MW: … to get their application online as quickly as possible. So we made that super simple for them to do. We added fast provisioning so we could deploy a cloud server in under a minute. So… and basically enabled these developers to save time and become more productive. And then once we… once we understood who they were, we then built out our marketing blueprint. We changed our website, messaging, the copy, the call to actions. We really tailored the brand from a digital perspective to meet the needs of… and cater to the needs of these individuals and really connect with them.
So we did a lot of testing early on with the website. We measured conversion rates early on, so my advice is always to be testing, always to be measuring. We used MySQL and analytics, Google Analytics to do that, to track that. So make sure that you had your tracking tools implemented. And then as the business slowly grows… so we were able to go from 50 customers to 2,000 customers over the course of six months. So it wasn’t hockey stick growth.
MW: It was more linear.
MB: Right, right.
MW: And then when we released our new plans, we were fortunate enough to get a TechCrunch exclusive and that was the disruption in the market that occurred. January of 2013, we released a new plan and that really then set us off on this hockey stick growth path and…
MB: And so you had… so from 50 to 2,000, you were sort of iterating and testing the messaging and then by 2,000, you felt okay, we have this right and we’re going to do a broader PR push?
MW: Exaclty. Broader PR push.
MB: And would you recommend, I mean it sounds like that was a very successful event for you guys, right?
MW: Absolutely. I mean once we… once the word got out, developers started to play with the product and test it out. It got picked up on Hacker News eventually, which is a very highly-concentrated resource for developers.
MW: So we hit number one on Hacker News and that just continued to catapult our growth. So… but even before that, going back to the beginning, we really had a deep, deep focus on content. And going back to what I was talking about with understand your early adopters, building out that blueprint, we understood what content they absorbed online. What content do they… did they read?
So for us, it was… since we were selling servers, it only made sense to share the recipes of server configuration online, tutorials on how to configure your server.
MW: So we invested heavily early, early on in building out all these tutorials. We now have over 800 tutorials and a lot of them are number one, number two on Google for keywords such as… like how to install rails on Ubuntu and how to install Python on CentOS, and all these different highly searched keywords. And then once they hit the website, what we do is I like to call starting this marketing growth engine of retargeting those users once they leave your site with some type of incentive. We use promo codes, bringing them back to the website.
MB: Got it, got it.
MW: Converting them into a free trial or sign up and then moving them down the funnel, offering a referral program to refer their friends once they… once they enjoyed the product and they want to share it to earn credit, and if you really want to create this cycle that… that event… this growth engine that will continue to snowball. So if you build it out early on and once you get past the direct selling and you’re starting to acquire leads and customers through the web, this growth engine is going to help carry your business forward and essentially, it’s going to put your business on autopilot.
MW: Where you just need to continue to optimize to make improvements month over month.
MB: When you… and then just step back a second. So when you invested heavily in content early on, what specifically were you… was it people or sort of human capital?
MW: Our first…
MB: … technology.
MW: Our first employee was a writer.
MB: Got it. I think I remember that.
MW: Was a writer, so her name’s Etel and… and she… she was writing approximately one to five tutorials a week. So we were… we’re shooting for 20 a month.
MW: And that really got us off the ground. The organic traffic, search traffic went from 10,000 visits to a month to now, we have over five million a month so…
MB: And what was the promotional effort you put behind that, or was it you just…
MW: It was… it was a combination of just high quality content and knowing SEO.
MW: Knowing the proper SEO best practices to implement, so making sure that your title tags are properly set up, they’re synced with the title on the page, the title on the page is in an H1 tag, making sure that there’s internal links so you’re linking to other articles, relative articles in the same articles so that it builds this internal web linking share on your website. So that… that’s going to… all those tactics help generate a higher search ranking for your content on the web.
MW: So you want to make sure you just knock out that checklist of… from A to Z of all the things you need to do to give your content the best shot in hitting page one Google for the desired keyword.
MB: Sure. And then so you have this TechCrunch article, the growth becomes hockey stick, how did you set yourself up or what were some of the best practices or foundations that you needed to build because obviously, as you’re growing that fast, it just becomes trying to keep the train on the tracks, right? So…
MW: Yeah, exactly. Trying to hold on to the rocket ship.
MW: Keep the trains on the tracks. Once… once you start growing that fast, it’s not only a matter of continuing to optimize the marketing engine, but also hiring the right people…
MW: … to support the growth.
MB: So what’s the scale now? So you had… you started with a writer as your first hire. How many people in the… your organization right now?
MW: So… well, the company is composed of 100 people under the… my team. So I managed the community team which involves the writers, the content writers, developer evangelists, social media manager. And then as well as the marketing team now, I’m VP of marketing, and creative marketing manager. And then the customer onboarding team which goes into more like a lead gen type…
MW: … inbound sales.
MB: So it’s a sizable…
MW: Inside sales group.
MB: … sizable group.
MW: Yes, it’s a sizable group. It’s… right now, it’s 15 people.
MW: As a whole. So… again, it’s finding the right people and then finding the right people to support our growth for us, who will support, having a support team to answer all those customers and their questions, their problems, their issues.
MB: And how many… just… I don’t know if you can disclose but how many support people per number of customers do you guys think is a good proxy in this business?
MW: Well, it’s…
MB: Or do you not look at it like that?
MW: We actually measure by tickets.
MB: Got it, got it.
MW: By ticket… by ticket volumes, so one support person can handle around 200, 100 to 200 tickets a day.
MB: Got it, got it.
MW: So that’s how we base… judge our need…
MB: Sure, sure.
MW: … for support resources.
MB: Got it. And then… so maybe to shift gears a little bit. What were some of the best tactics or if you can disclose, the worst things that you did that just totally failed. Maybe let’s actually start with that maybe. What were some of the things that you just did that said, “Well, this is… this really just didn’t work.”
MW: Yeah, I think it’s… it’s sometimes difficult to try to make some different channels, different traction channels work. You really want them to work.
MW: For instance, like AdWords or if you want Outbrain to work for content, a promotion, or if you’re looking for socials ads to work for you. So it… what happens is you basically commit yourself to optimizing and enhancing a channel that isn’t driving the best CPA, the best hack for your business, and you get bogged down and essentially, what happens is is you waste your time and you hurt the company by not focusing on the top three traction channels. So…
MW: … we actually just put together a marketing growth strategy not too long ago a deck… we’re going to… moving forward. We’re spending 90% of our time focusing on the top three traction channels. And there’s actually a really good book called Traction and they… what they use is they… in the book, they display what’s called a bull’s eye ranking and in the center of the bull’s eye that you want to list out the top three channels for your business, nothing more and if you only have one or two, that’s okay.
And then the outer ring, the middle ring would then have like what are the next best channels for you that have potential. And then you have the third ring, the outer ring, which is channels that are out of reach, that you…
MW: … feel like could work but just seems like it’s… it would be too difficult to scale, right? It just doesn’t have any chance of scaling.
MW: So for us, our… I’ll disclose what our top three traction channels are.
MB: That’s okay.
MW: So for us, it’s organic word of mouth, it’s direct, and then so that’s SEO.
MW: And then we have a referral program as the number two driver and then three is our community tutorials and our retargeting channels. So again, going back to when I was discussing about our… creating that growth engine, retargeting through Google, through Twitter, through FBX, Facebook, making sure that you’re reminding your website visitors that hit your website and absorb your brand, bringing them back to your website and re-engaging them is a great way. It’s a low-cost way to increase your signups.
MB: Sure. And so going forward where you really… you’ve obviously seen the light through this piece of work and you’ve come to find those three channels as being the best. Do you think that’s applicable for startups once they go through the whole opportunity set from a marketing standpoint, just pick three and really, really lean into those and focus on them?
MW: Yeah. I mean, it’s okay to test as many as possible early on. Once you get to a later stage, it’s… then it becomes more crucial to prioritize and focus on those three. But I could tell you early on, it’s great to test as many as you can to… we’ve always tested new channels and new opportunities. So that’s… we call it channel discovery and you always want to make sure that you are taking advantage of any new opportunity that’s available. So if a new ad platform comes out and it’s new and your competitors don’t even know about it and it’s a great way for you to hit a market that isn’t being targeted by your competitors, then absolutely go for it and you’ll have a great chance of really succeeding.
MB: Sure. Makes sense.
MB: Any closing thoughts for the younger generation of startups out there on how to grow as quickly as D.O.
MW: Closing thoughts, keep takeaways, invest in content early – it pays out dividends. Trust me, I know. Be patient as you acquire your early adopters. You’re not going to start scaling and sign up thousands of customers from day one, day 30, day 60. It takes time, it takes a lot of energy, it takes a lot of testing, takes a lot of tracking. Just be patient, continue to always optimize, move the needle, and grow slowly early on. Research, understand your customer base, and then once you’re ready to make a big push, either on the product side or on the marketing side, you can go full throttle and really start to accelerate your growth. So I… let’s say those are the two big takeaways.
Also, I would say number three for me is don’t get stuck in the product trap thinking that you’re going to build the next WhatsApp and your product’s going to take off and you won’t need any marketing effort. So it really should be divided 50/50 in my opinion – split 50% marketing effort, 50% product effort to really drive the business forward and giving your company the best shot in succeeding.
MB: Thanks. Appreciate it, Mitch. Appreciate you coming in to the office and chatting with us and hope to see you again soon.
MW: Thanks, Mike.
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