Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses. Joining me is an entrepreneur who back in the, very first internet, boom said, you know, it doesn’t have to just be on computers.
What if we could take all this knowledge that’s being generated by the internet and make it available to people by phone. I feel like Alex is one of the reasons why people are excited about the future of technology back then, right.
Alex: The fact that you weren’t stuck at a computer, but you could connect both with information and people anywhere you went with, whatever device was in your hand, that was a really compelling vision for people. And it really did get them excited.
Andrew: I would even take it beyond that, the fact that you took information outside of the computer made people feel like what else is possible? We don’t know. We’re now living in a world where anything could be done.
Alex: it made people feel like star Trek comes to life. Right? So our first service, let you say what you want. It, I’m looking for a Chinese restaurant. I want to see this particular movie. Where is it? And that was star Trek. That was the guy with the little communicator. Thing. Here’s what I need.
And I think the fact that that was all connected to the internet, it’s made it really interesting for people.
Andrew: All right. I should introduce the person who you, well, she just heard his name is Alex Quilly cheat. You’re right. It is easier to say Kalichi with your hands outstretched, the way that you said it. He is the creator back in 1999 of a piece of technology and company called quack. He sold it to America online.
It became an integral part of one of their services. He is back or not now, but 13 years ago came back with you mail, you mail his visual voicemail with spam protection. And I think you guys beat Apple to this, right? The ability to get my voicemail from YouMail in text form. I remember getting that from you before Apple.
Alex: So we were the first friend number of things. So we were the first people to let you get your voicemail off your cell phone, where you didn’t have to call in and get it right where you could just play it through a visual interface. In our case, we did it on the computer. So you could sit down on your laptop and get your mobile voicemail.
That was kind of our first. Interesting innovation, but we were one of the first transcribed messages. So you can simply read your voicemail and that’s just a fundamentally different way to look at voicemail. I mean, instead of calling someone hanging up and texting them, you call them, leave a message and boom.
Yeah, you can read it. It’s it’s more, it’s actually faster and kind of brought voicemail back.
Andrew: The reason I signed up was because I just want an easy way to forward the message to Andrea, my assistant and say, here, can you please follow up with this person? They seem to be angry at me, or I don’t want to deal with their system, right? We’re going to find out about how he built these two companies about the sale to America online and so much more.
Thanks to two phenomenal sponsors. The first is a company called delighted. They’re going to help you delight your customers. You know, something that I’ve discovered, Alex, a lot of the entrepreneurs that I’ve interviewed here. Even post COVID if they’re doing well, they’re still anxious about churn. What if our customers leave us?
They’re still worried about whether people still like their product. They still want to get a sense of where their business is going. The light is going to help them keep their customers and get new customers. And I’m going to talk about that sponsor and my second sponsor, which is top tile later on, but first Alex, do you remember the day you sold to America online?
They were huge in the day when you sold.
Alex: I did, it was a spectacular ride from us cause we went from being in a, you know, literal garage type environment to selling to what was one then one of the biggest companies in the world in 18 months. So it was, it was a wonderful ride and completely unexpected.
Andrew: is it inappropriate to ask you if you got rich from that sale?
Alex: Remember the story AOL and time Warner had a little merger in AOL fell apart. So, uh, maybe not as I didn’t do as well as I could have done, but you know how it entrepreneurs are locked into their stock and there’s all sorts of issues, but let’s say I’m, I’m plenty happy. And it’s allowed me to do another company.
Andrew: I remember Ted Turner was famously really upset because he owned a lot of time Warner stock, and then he ended up owning AOL stock and rode that down a bit. What is it? Can you say how much a sale was for back then?
Alex: Yeah, it was 200 million.
Andrew: Wow, we, and then by the time you were able to sell it, how much had the shares gone down in value?
Alex: Well remember. So what people forget is they think of an entrepreneur as the face of the company. So when the company sells, the entrepreneur gets the check and then you go buy a Gulf stream and, you know, McLaren’s and all that, it’s not actually what happens is you build the company, you have investors, you have partners.
I had two cofounders. We were all in it together at the start. We got some angel investors. We went and got some VC money. By the time you put that all together, the pie it’s a big pie, but it starts getting split up. So it’s still interesting, but it’s a. It’s not a number like that.
Andrew: What percentage did you own roughly back then?
Alex: Gosh, I can’t even remember anymore.
I, you know, it was decent, right? If you figure typical, typical cap table, by the time you sell the founders have five, 10, 15% of the company, 20 Ben’s it’s in that ballpark. Right?
Andrew: Back then it was even less because they didn’t believe the founder really was worth that much. Right. But then again, it’s only been 18 months. What did the idea come from?
Alex: So quack was really interesting. It was frustration of being in a store to, I think, purchase a mountain bike at the time and going, am I getting a good deal or not? I guess I could go home. I could Google. I could back then it was even Google, right? It was like a AltaVista or whatever. I could go do a bunch of internet searches and see if I could find it somewhere less.
But, you know, I really want to buy it now. Darn. What do I do? And so the idea was why wish I could just say into the phone what the product is, and this is pre smartphone. So I could dial a number. I could say it’s a specialized mountain bike. It’s this brand or this, this a variant. Tell me how much it is online, where it was and let me choose, buy it online or buy it here.
So think of it as the very first mobile price shopping. And that’s what started us down the whole quack path.
Andrew: Now you didn’t create the voice recognition software. I found an old press release where you were talking about your partnership with Lycos, which was one of the big searches sites back then where you said, I, I can’t find it right now, but you said you partnered up with someone else to use their voice recognition technology.
Am I right?
Alex: Yeah, it was a company called speech works. But when you think about building, what was then called the voice portal, or would I guess now would be called Siri, right? It’s an extended version of what we did. the actual handling and recognizing the voice is only a small part of it. It’s mapping it to what the person is trying to do.
And so we use speech tracking tech recognition technology, but built a layer on it. So that could connect to all the information out on the internet at the time, like the movie showtimes and the restaurants and your email and a host of other
Andrew: How, I mean, we’re talking about days before API, before open protocols, before it was accepted that two companies should get data from each other.
Alex: you know, so back then a lot of it, what started out by let’s just grape sites, build grammars and provide access that way. And if there’s interest, go talk to the site and see if we can partner with them. And that’s, that’s how we got started.
Andrew: What’s an example of a company that you did that with.
Alex: I’m actually trying to remember now.
I think we had a partner on the weather side. It’s, it’s been a long time, but we found a place where we could get the weather and they were fine to have us get it. And once we got to AOL, then we had access to all the different AOL verticals, which made it easy partner with Moviefone partner with, I think it was digital city, all, all the companies within AOL.
Andrew: And so you went to them, you said, can we get, we started scraping their data, showing them, look, this is how we can get the weather’s the weather from your site into our system. And we’ll give you credit for being the weather source. Is that what it was?
Alex: It was, it was roughly something like that. Yeah. So we’ve looked, we built the thing, have it running, have it going then be able to go to folks and say, would you like your data here? Would you like people to access your content this way? And some people were interested, some word, I remember some restaurant guide was really unhappy, so we didn’t use them.
Andrew: What was in it for them for giving you their data.
Alex: I think initially it was the brand, but there was a model over time where advertising or commerce would be integrated into the portal. And so they would get more, more business basically, right. We’d drive traffic to them or we’d have, as they split the revenue. It was, it was a pretty nascent business model because we went and got bought so fast.
We never really got to launch the product before the initial kind of. Initial product launch, right? It was initial product launch was I think in may of 2000 and we were sold in August of 2000. So all those business model questions never really got answered. We just became part of AOL and became a subscription service.
And it was, it was easy once you’re part of AOL.
Andrew: Why did you sell to AOL?
Alex: Uh, the money. I mean, that’s a big part of it, but the other thing for us as an entrepreneur, you want to impact people as much as you can, right? So when someone gives you a good price and says, you know what, we can get you in front of at the time, it was this astonishing number of 20 plus million AOL subscribers.
That’s super appealing. We can be the phone interface to AOL email. For 20 million people I want and I’m going to get paid a lot of money to do it. This seems like a no brainer. I want to explore this and that’s why it’s the combination.
Andrew: you sold to them and then they turned it into AOL by phone, right?
Alex: Yeah. So that was, think of how Siri lets you access the different pieces of information. Now on your phone, it includes email. it can include a voicemail, it can include other things. Well, we did that way back then with AOL content. So you could get your email, you could forward your phone line into AOL and we could get your voicemail.
we had weather, we had, Movie found it’s gotten to be so long. I can’t remember so many other pieces, but the idea was that whole experience of the AOL desktop could eventually be brought over by voice to mobile.
Andrew: And people could just do it on a flip phone with nine numbers, the pound in this app and the star sign, and just be able to get all their data that way.
Alex: That that’s right. In fact, believe it or not, people could use it from a landline phone too. So line it’s like calling grandma, you could call and get the weather or call and listen to your email. So there were a lot of different use cases for that kind of model of interacting with the web.
Andrew: It looks like you stayed at America online for about seven years. What did you learn from working at American? Online is the VP of a voice services.
Alex: How hard it is to get anything done in a big company. It’s really difficult, right? So you’re not entrepreneur. You have. The story. You tell it to investors, they buy it, or they’ve dump. You get some money funding and you’re off and running. It’s your vision. You’re going to push it. And the realities of life will influence where you go.
People don’t want to use your product or people use the product differently, but it’s a very quick, fast cycle in a company. You’re just selling everybody all the time. I’m selling that. I need resources. I’m selling that. I need inventory to advertise this service, to get it. I’m selling, I need people on my project and instead of somewhere else, So it’s a much different environment where you’re not in control.
I think it’s, it’s like a, you know, skateboarding into a brick wall for how it feels you’re so used to going really fast and then just boom.
Andrew: Was there an example of something that you are especially eager to do that you knew was right. And you had to just go through this process of selling.
Alex: I really wanted to do a phone numbers. So where the phone number would be accessible online, you could make like a soft phone, you could do calls through your computer. It could eventually be like a second number. You could have access to second button on your cell phone. You press a dial, you can make calls, get calls.
So think of like Google voice. Right. I really wanted to do that in 2001. And when we finally got it built, we built it in aim. So as part of instant messaging in 2000 and. Five. So it took me four years to convince people to do it and we launched it and there was like, Oh, what’s the business model. Let’s slow it down.
So it’s not what you experienced as an entrepreneur, you get a bunch of people using your product as an entrepreneur. You’re like, fine. I’ll figure out what to do in a big company. It’s like, Oh, our costs are going to go up. Are we sure we want that? And it’s a whole different ballgame.
Andrew: You know what Google launched in 2009 years after you? I don’t think they ever figured out the business model either though. Now it’s part of G suite, so it’s a Nat on, right. But they didn’t figure it out.
Alex: I think if you look at who’s figuring out second phone lines, it’s very specific use cases. So YouMail actually has a second phone line service and we focus very specifically on. The very small business. You’re a dog Walker, you’re a babysitter. You’ve got a catering. Is that something that’s sort of one person, they’re all calling you on your cell phone.
You want to move that traffic to another number and use that number for your business. We feel a lot of success with that model, but you know, it’s, there’s no way to do that for free. You need to charge people, but you should charge people because they’re making money using your service. So it’s a fair trade.
Andrew: Ultimately though, maybe it was right for AOL not to have a push for that. Right. Considering that they had a very consumer based customer base.
Alex: I would disagree because if you look at instant messaging, it was used for phone calls all the time. Right. People started doing messaging back and forth, and then they had the first audio calls. And, and what we saw is that the messaging clients expand to take over everything. Right. Look at WhatsApp, So it was the first step. It’s like let’s become a communication hub on both the mobile phone and on the desktop. And I think AOL was in a really unique position back then to do it. It was before Skype and taken over the whole world. But you know, it’s tough because in a big company, if you don’t have a great business model that someone’s going to take awhile and you’ve got to figure it out, it’s a tough place to be.
That’s why people are entrepreneurs. You go do it separately.
Andrew: How’d you learn how to sell within a company?
Alex: the hard way, right? If you watch the people who are really good at it and see what they do. And so they find out they go through an actual. Process of trying to figure out what people’s needs were more than just, Hey, we need to hit these numeric targets, but what does this person want to do with his business?
Where does he want to go? And there’s a whole process of taking your vision and putting it inside that goal that somebody has. So you get a champion and they do it kind of working up the chain, working with their peers, and gradually your idea kind of fits in with what other people are doing. It’s it’s a long, painful process.
Andrew: Dude that is so painful. That’s like B2B sales for a new product, a new business without any of the upside of, of a win. Right.
Alex: Well, the win is, if you do get it launched, you get a lot of people on it, right? And you get the satisfaction of something you built and dreamed of being used by a lot of people. So when we first did AOL by phone, everybody thought Ted Leonsis was crazy. Cause he was going to charge $5 a month for it.
Right. And in the first six months, 12 months of launching, we had three, four or 500,000 people paying that amount. And, you know, that’s a big audience, but at the end of the day, two, three years, we added other features were over a million people.
Andrew: A million people paying five bucks a month to be able to get their email and other services via phone.
Alex: integrated communications, email and voicemail over the phone together, right by voice or you’re driving, you can do it all. Plus the weather plus, you know, there’s the whole vision of other stuff to, to fold in there. So back then that was a lot of money. Remember that was kind of a dial up era, right?
People weren’t. We were one of the first premium services that anybody did.
Andrew: All right. I want to talk about my first sponsor and then we’ll get back into what happened after, after you left. Oh, I also want to know what did you, did you get to buy something for yourself, a treat yourself after the sale, but first I want to tell you about the lighted.com. You know, one of the things I was just talking to the team of bill from delighted, they told me that.
Before COVID businesses, we’re asking the net promoter score. How likely are you to tell a friend about this business or recommend us to someone else on a scale of one to 10? You’re saying that right now, that’s just not the right, the right question to ask for many businesses. And I understand this. I don’t know about you Alex, but someone just asked me that question the other day.
And I gave him a zero because to be honest, the market was down that day and I thought, Oh man, what’s going to happen to my savings. And then we go on a note from the city of San Francisco saying the schools were closed. I go, I’m not recommending anything to anybody right now. Of course, it’s going to be a zero.
I’m worried that I’m worried that we’re still going to be around here as a family. Well, maybe not that dramatic, but you know, And so what delighted has been noticing is since delight, it is a way of serving your audiences. Many of their users are asking just quantitative questions that get people to hit a button, to tell them one to five, how happy they are, et cetera, but more open ended questions about why are you feeling this way about our product?
How are you feeling this way about our product? And it’s the weight. To understand whether customers are going to stick around with you or leave, whether somebody who’s on the bubble or experiencing your product is going to buy or just move on. And the way to do that is you go to delighted.com/ we’re going to give you a URL where you’re going to get a great deal where you go to their site.
You add this widget to your site, to your emails, so many different ways that you can add it and put in front of your audience. You ask them questions that will get you meaningful information and delighted. We’ll help you get. Value and understanding out of that so that you can use what people have told you to actually continue doing business with them.
All right. There’s so many benefits to using delighted. They’re going to give you an incredible offer and it’s going to be at a URL that are, he’s going to put right here because we don’t have it yet. It’s that fresh of an ad and Ari is going to put it in. Thank you, Ari. Alex, did you buy anything for yourself?
Alex: I did. I got my first home. So I went from a rent controlled apartment in Santa Monica that, you know, could barely fit into a nice little home in Malibu. So that was pretty cool. my wife and I got a porch, which we’d never had, it was always my dream. And mostly we started staying in hotels that were nicer than motel sixes.
That’s where the big differences.
Andrew: I’ll tell you what, when I sold my company, one thing that I was able to do is go to the Caribbean. And this is such a small thing, Alex, but this for a guy who never took vacations, that was big. Here’s the biggest part for me, there was a guy in jet skis who was just taking people on tours.
I said, great, I’m going to go do it. When the thing was over, I had so much fun. I said, can I just pay you one on one to do a nut? I just have never done this type of thing before, so sure. And I got to do, and I said, I have the freedom to go and do this. I have the money to say this guy, how much is it going to cost?
And it’s not that much. Now I get to finally experience the number of part of my life that I never was comfortable experiencing. You have anything like that?
Alex: You know, it was actually the first time we went out to eat, we said, let’s go have a, sell it celebratory dinner. Right. And. I don’t know if I’d ever spend more than a hundred dollars for two people on dinner. And it was like a $400 dinner and I didn’t feel bad. Right. I felt like we had a four hour dinner.
It was, I think John George’s and in New York, it’s like, this is amazing. And I, I didn’t know, stress like, Oh my God, how am I gonna pay for this? Or this is going to suck at the end of the month and what it was just,
this is great.
Andrew: A little things like that. So then why did you leave America online?
Alex: You know, five years is a long time. Actually almost six years is a really long time to be anywhere, right. Especially at a big company, but I did achieve some goals. I made a, what we did, we proved that we could have a voice portal and drive a lot of usage. We had over a million subscribers. I got the second phone number, the aim phone line service launch.
And I sat and said, you know, I want to do the next thing for me. I want to take some time off. I want to spend a year, you know, figuring out what I want to do next. Find some idea I’m really in love with and go drive it. And so that’s, that’s when I left.
Andrew: What was you? Male’s history. How did it come about.
Alex: It’s it’s a really interesting history. There was a call center services company called Zicam, and they had some guys there who had come up with this notion that everybody should get their own greeting. Right. Like at a call center would be better if you could just greet the person by name, who was coming in automatically and say, Hey, Alex, please hold, you know, will serve you shortly.
And they decided they wanted to build a company out of that. So Zicam, let them spin off that idea of let’s become mobile voicemail that can greet people by name and could access the voicemail on a computer too. So a little bit of productivity, a little bit of fun. I wasn’t fully baked, but I thought it was really good.
Interesting to have this little company with this idea that potentially had a big market. If you could. Sell it to the carriers. You could influence hundreds of millions of people. You could potentially make some real money by becoming the new voice layer within the carriers. And I thought, Hey, this is a pretty interesting company.
When they came to me at all, I’ll invest. I was a tech coast angels. I’ll put some money in and see where it goes and, you know, move on to the next thing. That was, that was the plan.
Andrew: I remember tech coast angels from when I lived in Southern California, it was a group of entrepreneurs who decided they were all gonna listen to pitches together and I’ll go in together and, and, and invest right.
Alex: And very importantly, due diligence together. So you’ve got the expertise of people in the group. So when you’re doing it by yourself as an angel investor, You don’t know everything about everything, right? But if there’s an expert who understands the market, someone’s trying to do better than you or understands their strategy for busdev better than you, or has the right contacts.
You want that expertise. So the idea was banded up like a group we’re different people can look at different deals and really help out. And then everybody would kind of get a summary and you could decide what deals you wanted to go into. And I happen to be on the diligence for you when they were looking for TCA money and it’s right up my alley.
And I thought, well, you know, I don’t really like where they are now, but let’s put some money in as a group and see where they get.
Andrew: And at what point did you end up leading the company?
Alex: wow. Really, really quickly after that. Right. So I think I resigned from Mayo. Well, on, in January of 2007, maybe February I’d been home, I was actually FedExing my badge back to them. And I got a call from a director on the email board saying, Hey, we need your help. this company is a mess, can you help us fix it?
I’m like, I just put money in this. What do you mean? It’s a mess. It’s been like two weeks. They just said, no, we have some issues I want to talk to you. Do you think you can help?
Andrew: How did due diligence not, not bring that up.
Alex: No, the problems with diligence is you don’t really get to see what all the people are like and how they handle different situations.
Right? And so sometimes, you know, when somebody’s pitching, they’re completely different than how they’d be operationally and the minute they there, they’re sitting here with, okay, wait, I’ve got money, I’ve got to get back to my shareholders. I’ve got to get a product built. I’ve got to do this. They suddenly kind of freeze up a little bit and it can be really stressful and not quite know what to do.
And. You know, you can spot that when it’s happening, not necessarily before. And so in this case, the people in the company, or just quite the right in the right positions, or that was our thought at first, they just needed some guidance, someone to help push them forward on their strategy. And I thought, yeah, sure.
I’ll do that. And did it as a part timer for awhile. And try to help guide them and make sure they built a product that was good. Tried to guide them in who they brought into the team. And after a while it became apparent the company had a lot more money. If it was going to play in this market, it needed a bigger team.
It needed real direction and a full time person. And I was sort of there to do it. So we ended up having me go full time at some point in 2007, with a strategy of, you know, build a cool consumer product with the goal of selling it to the carriers. And becoming a white label provider to the carriers that that was you.
Emails, emails, game, email, version ones, game.
Andrew: I can’t believe that you were thinking that you could convince the carriers to buy anything. I felt like first of all, there aren’t that many of them. And second, it doesn’t seem like they’re open to. Buying things and adding services. The only thing that they seemed open to was ringtones back then.
Alex: You know, it’s when you look back at it, it was like, how can we be that stupid? Right. But then how could the VCs who put money in, into that vision benzos stupid, you know, It’s all this delusion of where you think I can sell to a carrier that’s 300 million people or a hundred million people, even if I’m only getting, you know, 20 cents a person a month, look at my giant business.
Alex: And. That we were thinking we can scale it at the time we thought we were, we are pretty differentiated, but I think the big things we learned in our carrier cycle, we also thought let’s start with medium and smaller carriers and work our way up. Right? So it wasn’t completely delusional. If we could get some traction, then we become more interesting.
I think what we learned is if you can’t control your destiny, your destiny is not going to be one you want. And so with the carriers, we just couldn’t control it. We get deals with smaller carriers who wouldn’t pay couldn’t launch struggle, you know, medium carriers we’d get launched, but they would have problems getting there with their users.
And it was just, it wasn’t, it wasn’t working. Right. And they had just too much, too much of an entrenched bureaucracy in the carrier beholden to the existing players. So bad, very bad idea to do that. But the one good thing was we built a consumer service in order to sell to the carriers. And after two and a half years, when we were running out of money because the sales cycle was so long, we just couldn’t do it.
We realized we had a million people who downloaded our blackberries. Yeah. We’re not even paying attention to it. And this thing was, you know, often number one, even in the Blackberry store was a pre app, but number one, it’d be in the top 10, it was getting 25,000 downloads in some weeks. It was, it was insane.
And so we said, you know what, guys, we blew it with version one. Let’s become a consumer company. And that was, I used to have email recapping the company, be writing some pretty good sized checks as part of that and saying, okay, we’re now going to go out for consumers and see where consumers take us.
Andrew: And this was also you launched, I think before the app store on iOS, but not much before that, I guess it was called iPhone iOS at the time, but. The the first version, it seems like what you did was even before Blackberry, you ask people for their phone number and you’re going to do a redirect from the carrier.
Is that right?
Alex: We still do that. We’re the largest place out there that calls are diverted off the carrier networks. So the way voicemail works is a call comes in. If you don’t answer it, it gets forwarded to a phone number at your carrier. Which has a server answering your call and doing the magic of voice. So we said, well, why does it have to afford to the carrier’s number?
Why can’t it forward to us? And sure enough, there’s a feature that most cell phones support, GSM supports and CDMA supports where people can dial a code and a phone number. And that becomes the number that’s used for voicemail. So we thought that’s going to be something that’s a little bit hard to overcome.
We’re going to lose some users, but if we can put a good enough product together, they’ll be willing to trust us with the voicemail and go through that process.
Andrew: It’s just like star something like star your phone number, pound the phone number you want to forward to. If you don’t get the call pound some random thing like that. But once you hit that, your phone says, great, we’re going to go for three rings and then I’m gonna forward you to this number. Or if you do a different code, it automatically will forward all phone calls to that other number.
Alex: That’s right. That’s that’s diverting calls off of one destination to another.
Andrew: Carriers had that even back in 2007,
Alex: Uh, three of them did. So T-Mobile at and T and Verizon did sprint didn’t, but after a couple of years, there were enough people pounding on Sprint’s doors saying we want to have these already voicemail services. It wasn’t just us back then. It was a Google voice, I think was another one that pretty big.
So they said, sure, let’s open it up. Why do we care? Whose voicemail, who, who has voicemail?
Andrew: Right. They weren’t charging for it anyway, but then what did the, what did the Blackberry app do?
Alex: So the Blackberry app was VI was basically like the iPhone visual voicemail for blackberries.
It was a way to see the voicemails, but importantly, especially for Blackberry users, we had the web component. So if you were sitting at your desk at work, you didn’t have to go get your phone and fiddle. Your voicemail just popped up on your computer by email or in a web browser.
You can handle everything there. That was huge for business use. And the personal greeting. People love that personal greeting, right? You’re in business. And you know, someone’s going to call you a client who calls you once a month. You could have it in brief the client by name and tell them how important they are.
You’re really sorry. You’re not there, but you’ll call them right back. And having that sort of greeting recorded builds up that connection that you want.
Andrew: I wouldn’t have thought that people would care that much about it, but it is kind of a nice thing. T-Mobile does that now. I think when I call up, they say welcome, Andrew. We’ll be right with you.
Um, I was brushed over the difficulty of creating a product. How long did it take you to create this product?
Which did visual voicemail had an app on Blackberry for people to see their visual voicemail, greeted people by name, even had an email component where you would email the message over how long and how did you create that?
Alex: So remember back then there were no platforms out there to do voice services. So we built our own platform because even as a super constrained Twilio with the kind of platform services that we needed. So that took a couple of years to build that and improve it, to get to the point it can scale. Well, and then you build the apps as clients of the portal, you know, of that, that.
Platform where they’re using the API to go do various things and you start optimizing the user experience on the phone. So it’s an ongoing thing we like to say once we decided to do a real Blackberry app, it took about a year to get a really good one. But surprisingly, even when it wasn’t good, we had a lot of people using it, which is often a sign that you’re on the right track.
Right. You’ve got people using your product and complaining every day about it, but they don’t leave. And so when you have that, you know, you’re, you need to focus on improving it, but you’ve got the right idea.
Andrew: You know what I keep thinking about visual voicemail being the big thing. I’m looking at the list of 11 things that you listed as features in the first version, visual texts. I mean, converting the voice to text was not one of those items. There was custom greeting based on caller ID. Allow people to cancel their voicemail.
If they started recording something and they sounded Doby, cancel and rerecord, you allowed people to, you allowed your customers to play the recording on their desktops. You allowed them to delete the recordings. You had something called ditch mail, which hung up on callers after playing a customer and greeting it.
Wasn’t the thing that I know you for, which is a transcript of the voicemail didn’t come to later. It seems like right.
Alex: Yeah. And in fact, there was a long list of features of which only a few mattered. So the personal greeting mattered to people. They liked the different greeting for mom versus their spouse versus a client. Right. They love that feature. People love getting their voicemail away from their mobile phone, through email or on their computer.
That was, that was big. And then you mentioned ditch mail and so ditch mail. It was a really bad name for the feature, but it was basically, you can play a do, do, do this, this number’s out of service, greeting to specific callers.
And so that was designed for, you know, hookups gone bad, but getting rid of stalkers that sort of use case sales guys who don’t stop calling you.
and that was pretty popular. So we kind of picked all that stuff. Cause all the economics of it was in our control. We wanted to do voice to text and we eventually got there. But it was really hard to do in a free service. So we had to build a platform back then to accept subscriptions and charge people.
And then we could do voicemail to text it. Wasn’t something you could do for free back in the day. So we always wanted to do it. We thought it was super sexy, something people wanted and we still beat most of the big handset makers, but, it took a while to do that.
Andrew: Did you beat Jamie seminar? The guy who ended up creating ring, he created something like this too. Right? Did you guys come out before him?
Alex: We were both about the same time. I think email was out, he focused on voicemail to text. We focused on the other features and I think he was out around the same time as us. So he was
Andrew: close? It was just that it was stopped listening to a voicemail. We’ll have it transcribed. And I think he even had humans doing it too.
Alex: I remember hearing those stories from Jamie too. So yeah, it was, it was great where he was really focused on the business market. We were focused because we’ve been blinded by going after the carriers. We were focused on the consumer market. What features are what’s? What are the soccer moms going to use?
What are, what what’s that feature as opposed to hardcore, who’s going to, we wanted to get scale person worried about who’s going to pay us later.
Andrew: So the people who are on Blackberry, we’re not paying you for anything. They were just finding this app, installing it, getting their voicemail through it, having all these features that we just listed. When you discovered that you should just go direct to your customer, instead of going through the carriers, how did you, did you add a business model?
How did it change? What you created?
Alex: We did. We realized that, you know, somebody’s got to pay for this. So we thought about advertising and we tried it a bit, but it’s just until you have massive scale advertising is. Not really doing much more than annoying your free customers to hopefully convert, to pay, to get rid of the ads. That’s, that’s the main purpose.
So we, what we did see, you know, voicemail to text being something that professional users were interested in and telling us they want it. So we created at the very beginning, it was subscription services, like phone tag, where you’d pay us for different volumes of messages to be transcribed. And that did really well.
We went from zero to 2 million ARR and about, I think, 12 months. For which was really cool. There’s a way to monetize their audience and had we not done that we never would have survived, right? Because it’s, you’ve got, you’ve got a burn rate you’ve been around for a while. There would have been no reason to take this company and say, well, let’s convert it to really focus on consumers and put our investment in and bet on that.
But sure enough, that’s that, that model where we grew pretty fast, worked well and got us, got us started.
Andrew: I wonder how you sold on Blackberry, how you sold an iOS, but let me take a moment, talk about my second sponsor and then come back and I’ll ask you that. My second smile. Did you know a company called top Tao
Alex: No. I’m about to hear about it though. I want to hear about it.
Andrew: They have this system. Well, you know what, let me tell you what people who are listening to this could use top tile for imagine someone’s listening to us and says, you know what?
I have a few ideas for how boys could help our product, but I don’t have developers who know voice who know voice design. I think, I think we should add it. I don’t know that we want to be distracted by it though. You go to top town, they get you the top. Developers in this space, they introduce you to them.
If you like them, you get to hire them. Often. You get to get, they get started within days. Often they built what you wanted for other companies. And so they have that experience. And so they could get you the results you’re looking for. And if you’re happy with it, you can continue to build. You can even ask them to help transition it to your team.
You can keep hiring the person if you want, and continue to work with them. And the beauty of it is if it works. You got a person who’s experienced, who’s setting it up. If it doesn’t work, you call back top, Tom, you say this isn’t working. We’re actually going to cut this off and you don’t have to do layoffs in order to switch the direction of your company.
Many people who I’ve interviewed have used top towel. a lot of them, because they’ve heard me talk about them, the way that people are hearing me talk about them right now. If you haven’t yet tried them, you owe it to yourself to go to top talent.com/mixergy. When use that URL, you’ll get on a call with one of their, one of their matters and they’ll help you figure out whether it’s a good match and understand what you could expect from working with them.
And of course, since you use my URL, you will get 80 hours of developer credit when you pay for your first 80 hours, in addition to a no risk trial period. Top towle.com/mixergy. Do you still like deals Alex?
Alex: Do I like deal.
Andrew: Yes. I find that some people are just like, I, it takes me too much time to care about a deal I’ll just pay full price and other people will go to the end to make sure that they get the lowest price possible.
Alex: You know, for me, the deal has to matter. So I just bought my daughter a Mac and she’s going off to high school and got my wife a new one. Cause she needed a better one than my daughter. And I shopped for deals for that. But it’s 20 minutes. Oh, here’s the $200 coupon. That’s good enough. I’m not going to spend a lot of time trying to save money, buying cereal.
Andrew: No. I think it’s Bloomberg that has a podcast called foundering about they did a series on we work and they show how in the early days of we work, Adam Newman stood up and told all of his people. We have to be aware of costs. We will lose if we don’t pay attention to costs. And you really hearing him talk to his people saying, shut the lights off.
If you’re here at night, make sure that you turn things off. We need to save money companies die by not saving money. And then fast forward after he raised a bunch of money, you hear him talking to his employees again saying, are we a company that spends a lot of money? Absolutely. We will continue to be a company that spends, and he’s talking about really side-by-side hearing these two things is just shocking.
It’s just shocking.
Alex: It’s not shocking to me because in the first case it was his money. In the second case, it was someone else’s money and it’s always easier to spend other people’s money. It’s really hard to treat their money as, as if it were your own.
Andrew: By the way it was more and more of your own money. I wrote down a note to come back and ask you about how you recapitalize the business. You mentioned it and I didn’t ask a follow up question. How, how significant was it? How much of an ownership were you taking in a business?
Alex: I, I put in something close to $2 million over a three year period, to keep the company going. And I leveraged it where other people came in with me. And that was our way that. To make it to the point where we got to where we started doing robocalls, walking and started doing the curve in a much better direction.
So it was a really significant check, but I really believe that there was a need for third party services that weren’t coming from the carriers that made communications better. And if we could survive, we would find the right. We would eventually find the right path, our consumers, our business customers, someone would put us on the right path where we get some real success.
Andrew: And so when you were starting to charge, how did you charge Blackberry users? Were they the first people you were charging?
Alex: They were. So one of the great things about email was we have everybody’s email address. So we just send them an email saying, Hey, we’ve got a subscription service click here. They click, they go to a little, you know, site. We built where they put in their credit card and we built a little, we took some open source thing and turned it into a subscription engine.
And that’s how we got it. In fact, that technique works to this day. Really, really well.
Andrew: I well, I’ll get to how I I’ve seen you guys work now, but back then people were coming to you for free service. How do you tell them now it’s going to cost money. What were you doing? Where was the line between free and paid?
Alex: So there were a couple of lines. One was the, how much do you use this? I think I forgot what the message box size was, but once you were storing more than a hundred messages, which surprising a lot of people get there. And in weeks, depending on what they’re doing, if they’re a contractor, they get tons of voicemails.
They want to save them. That was one driver. Second driver was, Hey, we really don’t want to show you ads. So just pay us. We won’t show you ads. And number three was the voicemail to text. Like you could be reading this message, save time and spend a little money and we’ll give you really high quality voicemail, the tech.
So those were the three big drivers that I remember from way back then.
Andrew: How’d you know, what to charge.
Alex: we tried different things. In fact, one of the lessons I learned was we started low and tried to move high and you have to start high and move low. So we didn’t know how much our transcription was worth. So we’d started off with like two 99 a month, come on, pay us two 99 or pay us four 99.
And, you know, eventually we realized we could charge nine 99 or 1999, depending on the volume. So we’d started really, really low, but we were scared, right? We knew all the problems of our. Product. We figured that meant consumers knew all the problems and they would kind of discount whatever we’d want to charge.
And it turns out not to be the case. It’s people look at how much value do you give them? And you’re not perfect, but if you’re saving them 10 hours a month, that’s worth 10 bucks a month is nothing for that.
Andrew: What’s what’s a problem that you knew with the product that made you hesitant to charge.
Alex: just, it was, it didn’t have a great UI. I mean, the user interface was, was problematic. it was harder to use than I would have liked. I thought there were other, you know, some features where in the website and not in the app, so you’d have to go to the website to configure them. I thought.
That’s crazy. Who’s going into the website to do a bunch of settings. I’m sure I could go back eight years, nine years or whatever it was and go see the list that we had, but you’ve got your white board with, here’s my 10 things that are that suck and I need to fix. And that’s in your head. Sometimes it’s kind of like with kids, you see all the bad things they do and you forget about all the good things they do, right?
Hey, you got A’s in six classes, but I’m going to focus on that B it’s the same thing with the product, right. We’re doing some stuff really, really well, and we’re all kind of focused on, Oh, we’re doing this badly.
Andrew: I thought I saw trio on one of your sites. I was going to ask you about that those old phones or something. How big of a share of your market did, iPhone end up becoming.
Alex: Uh, right now it’s about 50 50 of iPhone users and Android users. So it ended up being, we mirror what the marketplace is in the U S for those phones.
Andrew: So what I saw about, so I tried YouMail I forget, I forget what, I don’t think it was a spam blocking. I think it was visual voicemail that I could email to my assistant so that I could have her give me feedback, or handle issues. I think you guys. Made it easy to use the free version. And then at some point you, your emails don’t give me the transcript, but say, you’ve hit your limit.
It’s going to reset in a few days, but if you want to get on unlimited, just pay a few bucks. That’s the way it works. Right.
Alex: Yeah, in fact, we got more aggressive. So when we email you in the free version, you get the voicemail, you just can’t read it. And so when you get emails, when you pay them, transcription is in the emails too. And so for people with the business use case like yours, of sharing it, you want your assistant to not have to play the message.
You don’t want to have to play the message. You just want to forward it. And so people are willing to pay for the transcription and some of the other goodies that come with that.
Andrew: I have to say, I don’t think people understand how annoying it is to listen to audio. Now I’m doing the podcast and I’m intentionally saying this because people think that because I’m doing the podcast, they could send me audio messages on my iPhone. I don’t want to listen to it.
Two minutes of you going, Hey, Andrew, hope you’re doing okay. Things are a little wacky right now. Right. But by the way, and no, just let me read it. Twitter came out with their audio tweets and they thought they were geniuses for adding a new feature. Nobody wants to listen to it. Do a transcript. If you’re going to let me play it.
When I hit play, let me see the text on the screen. Don’t you agree?
Alex: I agree completely. I mean, the fact is we essentially turned voicemail into a text message so everybody can read it. The audio is still around and there are times when audio matters, right? Like. You know, my dad left me voicemails and after he passed away, it’s great to have his voice every so often I can go listen to it.
Right. And we have a ton of users with a similar use case, or someone got a message from their friend, congratulating them, where they actually took the time to call, leave a message. They’ll play it hundreds of times over the years. So there is some real power to the human voice, but it’s rare.
Andrew: Right. And don’t get me wrong. There are times I just want to walk around and listen to it and not have to stand around and read it. I think with YouMail I get to download my message and I get to save it easily. Right. I’m not saying they should get rid of it. I’m saying if you do audio at all, don’t make people listen to it, give them a transcript somehow.
And if it’s in a tweet or something like that, just make it scroll with it. So his visual voicemail is still the number one use. I’m looking at the list of features on your site today.
Alex: So, no, it’s not actually.
So. It’s yeah, it’s, it’s actually spam protection. So it’s kind of robocall blocking involved into spam and scam protection. So we talked a little bit about that feature we had that would play the out of service message. Well, about four or five years ago, we went and tried to understand how, how are people really using that feature?
And what we saw was people were putting in 1-800-NUMBERS. The same. Yeah. The same number would show up in a bunch of people’s blogs in people’s greeting lists, or like what’s going on. And we realize they start that the robocalls to become enough of a problem that people were using YouMail as a tool to try to get rid of the robocalls.
And that was when the light bulb went off in our heads saying, you know, we have a massive sensor network of, of users and data and content. That we can use to figure out who the bad guys are automatically. We can use that to provide a really compelling, automatic blocking a robocall experience. And so we started building that out.
We built some really cool technology to do this, and essentially what happened is email became as least as a free service about call protection. So we’re going to stop the robocall. So you don’t get a scammer calling you if there’s a voicemail that comes in, for some reason, we’ll check if it’s a scam or not.
And put it in a separate folder. So you don’t have to worry about it. When you go to dial out a number, we’ll check it. That number is on a bad list and warn you, we started saying we can really protect your whole phone call experience from annoyance, right? The robocalls, and then fraud. So, you know, when these guys want even robocalling or calling with scams, you you’re protected.
He moved in that direction and it’s been really good for us. I’m glad we pivoted that way. You still have to have our voicemail to take full advantage of that feature, which is good, but it’s really about the spam protection. First voicemail. Second, for a lot of people, it’s like an 80 20 rule,
Andrew: Why is that? I know that I’ve interviewed a few people have companies that do nothing but spam protection. What they do is they have a list of numbers that they block, and then the iPhone will within the phone app, allow me to connect into their list of blocked numbers. You guys handle it differently.
You need me to redirect you somehow.
Alex: Well, so there’s two parts. So we still use the iPhone block list. Right. And fill in the list of bad numbers. The key though, is what, how does that list form? How do you decide what numbers to give Apple so that when calls come in, it’s going to be blocked. And so what we do is we use all the content that’s coming into our users and say, ah, This number, it’s an IRA.
It’s doing an IRS scam call. Cause it matches one of those calls in our database of, you know, bad content. Now we know we can block that number for some period of time, right? So it’ll be in the block list for IRS scams, like for one day. Cause after that they switched the numbers. And so we use the voicemail box in the same way.
Gmail does to kind of figure out what the content is. And does it match bad messaging like scam or messages if it does the numbers bad and we can block it and put it in the block list. And that’s really, you can think of emails having a massive sensor network of all these end points of traffic coming in a database of scams and a way to map the two together that outputs a list of bad guys.
Andrew: How did you know that was going to be the top feature? You know what? I didn’t realize that you guys have changed. I’m now in the app store, two things stand out for me. Number one, you have a 4.7 rating and a five. Dude. Isn’t that exciting? Do you ever get that framed?
Alex: We should, but once again, we look at that and go, where’s the other 0.3?
Andrew: That’s pretty high for it. A platform where people just want to go and complain. I don’t see the benefit of telling an app maker. Your stuff is great. And 64,000 ratings too. So we’re not looking at 305 people who said it it’s. Wow. It’s a lot. So I do see that you guys are now shifting towards saying the free service gives you wrote a spam call or robocall blockers.
How do you know that was going to become that? That was a big thing. What did you do to figure out who you are customers were and what they wanted?
Alex: Our customers told us we saw what they were using it for. So they were getting emails, a voicemail service, and focusing on blocking individual phone numbers left and right.
Andrew: How would you even see that? How did you know that that’s what they were doing?
Alex: So we have ways of that accounting, like H you know, how many calls are blocked in any given day? Oh, that’s going way up.
Well, let’s see you, you know, ratio of numbers, like a histogram of what numbers are being blocked. Oh, there’s a few that are blocked by everybody. You know, others are much less. And as you start doing that, you start getting a feel for. Geez, what are they doing? And then all of us got robocalls. Right? I remember my CTO was doing some work on his house and con the contract was over there and he couldn’t have a meeting with the contractor because so many robo calls were coming in.
The contract would go, ah, dang, it’s a robocall. Aw, dang. It’s a robocall. And it just became obvious. Right. And I would go to a event some field, but what do you do? Like, well, we’re blocking robocalls. Oh, thank God. So it was just this whole feeling like we could see. There were all these robocalls that were an issue, right?
Consumers didn’t like it. And then what we did is we said, you know what? We know which ones are robocalls let’s, let’s estimate what’s happening with the country as a whole. So back in late 2015, we said, if, if our users are representative, we have a big user base. If they’re representative and we multiply and extrapolate to the country, what does that look like?
And it was like, Crap. There’s a billion plus robocalls. And of course it went up to almost six that over the last five years. So we happen to just surf a nice wave there.
Andrew: I can’t believe that the phone carriers haven’t handled this better, the government is definitely saying, well, it’s not for us to handle. And iPhone and even Android with all their efforts, they still haven’t. They still haven’t squashed. This is shocking.
Alex: It’s a really, really hard problem to solve. So the way everybody tries to address it is by some sort of reach and frequency heuristic. Right? So here’s a code number calling in. It’s calling a whole bunch of people. It’s doing it really fast, right? Oh, probably a bad guy. Well, maybe not, maybe it’s the red cross desperately getting blood donors.
Cause some event just happened. So unless you have the content of calls and you can use that to understand what the call was about, that this was an IRS scam as a social security imposter. It was an illegal telemarketer. Unless you can see that you can block the outliers, but not the ones that cause all the harm.
Andrew: to me like it feels like basic capture and address book are all we need. If I could give you the 50 email, the 50 phone numbers that are likely to call me. And ask you for everybody else to go through some kind of case that should eliminate almost everyone.
Alex: So the problem is that eliminates the good guys too. So you have to build a list of the good guys, like CVS pharmacy calling. You don’t want their robocaller to just be blocked because it doesn’t know how to deal with the capture. And you don’t find out that your insurance didn’t cover your medicine and you’ve got to call CVS.
So a capture can help, but it’s kind of overkill. So at one extreme, you can say, you know what, I’m really antisocial. If it’s not in my contact list, don’t let them group. We provide that option, right? That’s that’s doable, but most people are in the middle. It’s like, I just don’t want the bad guys to get through.
I want Comcast to get through it. My payment method failed because I don’t want to lose my
Andrew: and I can’t give you comp right. Or suddenly a teacher at my kid’s school is using our cell phone to call me because my kid cracked his head open and I got a rush out of the office to go to the hospital, which has happened number. I don’t recognize
Alex: And when it’s, when it’s a robo call, like, Hey, the, there was, you know, an incident at the school, don’t worry, everybody’s safe and they want to blast it to everybody. If you’re hanging up, you’re just sitting there going, well, what happened? I don’t know. So they need to get their messages through so to do it right.
Requires some pretty sophisticated technology. And plus frankly, the bad guys are smart. They’re highly motivated. They know you can pencil calls. They’re going to work there, you know, with whack-a-mole with smart, smart moles.
Andrew: And they work overseas where the laws don’t necessarily apply to them. All right. I was going to give out your website at the end of this, but I feel like that’s not the best place for people to go. Anyone who wants to go check out email should go to their app store, right. And just check out you mail in there.
Alex: Yep. Absolutely. And our website’s pretty good cause we’ve talked a lot about basic YouMail, but we also have the second line service and it’s got a great virtual receptionist. So the website talks about that. So I think we’ve become robocall blocking for free call protection for free and a really great robocall free second phone number for businesses as our paid tier.
Andrew: Oh, and that other thing is called auto attendant where I can say, dial one, to talk, Andrew, dial two, to talk to Olivia, et cetera. And one for sales, two for customer service. And then it all goes over to Andrea, my assistant.
Alex: That’s that’s a great feature, right? Everybody needs an auto attendant.
Andrew: yeah, man, I thank you so much for doing this. Can w what’s the total sales now and give me a ballpark.
Alex: So we like to say that if we don’t clear 10 million, by the end of the year, I’m going to be really upset.
Andrew: So even now after COVID, you’re going to hit over 10 million.
Alex: I’m going to be upset if we don’t and we’ve done surprisingly well through COVID we were all terrified like everybody else, but people are not getting rid of email. They email serving in needs. So we’re in good shape now.
Andrew: All right. If you want to understand your audience and get a sense of how happy they are with your service, how likely they are to continue how likely they are to buy how likely they are, the cancelled really get in their heads. There’s no better service than delighted. And of course, if you need to hire a developer, go to top towel, thank them.
Both. I’m thanking, I’m thanking them both for sponsoring and thank you, Alex.