A few weeks ago President Obama visited Palo Alto to raise money the good ol' fashioned way: a $30,400-per-plate fundraising dinner. This tried and true fundraising technique is a great way to raise money if you can get the President of the United States to show up to dinner. But how can you raise money if no one has heard of you and all you have is a website? Back in 2007, when Obama was running for the nomination and trailing by double digits in the polls, that's pretty much all we had.

 

 

The Experiment

As Director of Analytics for the Obama campaign, my job was to use data to help the campaign make better decisions. We started with just one simple experiment back in December of 2007. This experiment taught us that every visitor to our website was an opportunity and that taking advantage of that opportunity through website optimization and A/B testing could help us raise tens of millions of dollars.

This experiment tested two parts of our splash page: the "Media" section at the top and the call-to-action "Button"

 

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We tried four buttons and six different media (three images and three videos). We used Google Website Optimizer and ran this as a full-factorial multivariate test which is just a fancy way of saying we tested all the combinations of buttons and media against each other at the same time. Since we had four buttons and six different media that meant we had 24 (4 x 6) total combinations to test. Every visitor to the splash page was randomly shown one of these combinations and we tracked whether they signed up or not.

Before you scroll down and see the results, which Button and Media do you think had the highest sign-up rate?

 

Button Variations

 

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Media Variations

 

Results

The metric we used to measure success was sign-up rate: the number of people who signed up divided by the number of people who saw that particular variation. Since there were a total of 310,382 visitors to the splash page during the experiment that meant each variation was seen by roughly 13,000 people.

Here are the different sign-up rates we observed for each section:

 

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Here are the sign-up rates for the combinations of the different sections:

 

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The Winner

The best-performing combination of button and media was "Combination 11" which was the "Learn More" button and the "Family" image:

 

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Before we ran the experiment, the campaign staff heavily favored "Sam's Video" (the last one in the slideshow shown above). Had we not run this experiment, we would have very likely used that video on the splash page. That would have been a huge mistake since it turns out that all of the videos did worse than all of the images. 

The winning variation had a sign-up rate of 11.6%. The original page had a sign-up rate of 8.26%. That's an improvement of 40.6% in sign-up rate. What does an improvement of 40.6% translate into?

Well, if you assume this improvement stayed roughly consistent through the rest of the campaign, then we can look at the total numbers at the end of the campaign and determine the difference this one experiment had. Roughly 10 million people signed up on the splash page during the campaign. If we hadn't run this experiment and just stuck with the original page that number would be closer to 7,120,000 signups. That's a difference of 2,880,000 email addresses.

Sending email to people who signed up on our splash page and asking them to volunteer typically converted 10% of them into volunteers. That means an additional 2,880,000 email addresses translated into 288,000 more volunteers.

Each email address that was submitted through our splash page ended up donating an average of $21 during the length of the campaign. The additional 2,880,000 email addresses on our email list translated into an additional $60 million in donations.

 

Lessons Learned

1. Every visitor to your website is an opportunity. Take advantage of that opportunity through website optimization and A/B testing.
2. Question assumptions. Everyone on the campaign loved the videos. All the videos ended up doing worse than all the images. We would have never known had we not questioned our assumptions.
3. Experiment early and often. We ran this experiment in December of 2007 and reaped the benefits for the rest of the campaign. Because this first experiment proved to be so effective we continued to run dozens of experiments across the entire website throughout the campaign.

Is it me or is everyone these days trying to get rich quick? Not only am I meeting more and more people who don’t want to work hard to make money, but they are starting to get into new business ventures that they are clueless on.

I know the grass always looks greener on the other side, but it really isn’t. Don’t get me wrong, those lucrative businesses are making people millions of dollars, but it’s probably doing that for less than .3% of the people in that industry.

So before you decide to jump ship and get into a new career, just for a second think about all the things you will be losing out on. Yes you may make some extra income in the short run, but if you put that time and energy into growing what you are already good at and love, you’ll do a lot better.

If you want to make a ton of money in business, follow these principles: 

Harsh Fact #1: Focus on what you know

If you are really good at something, focus on it. Don’t stray away from it, but instead just do that and become the leader in your space. If you don’t think you can make enough money focusing on what you are good at, then figure out what related businesses you can get into.

For example, a buddy of mine, Michael Dorausch, is a chiropractor in Los Angles. Although he does very well, he wasn’t satisfied with the income he was making as a chiropractor. But instead of jumping into a whole new field, he decided help other chiropractors get more customers from the web for a monthly fee.

Harsh Fact #2: Business development is the quickest way to grow

If you put me in a room with a thousand people and you ask me to close a deal with all of them, the chances are, I’ll fail. But if you put me in a room with one person and ask me to close a deal with them, there is a good chance I’ll be able to do so.

I am big believer that it is easier to convince one person to work with you than it is to convince thousands of people. The cool part about business development is that the one person you convince could have access to thousands people or companies.

For example, my friend Andy runs a TV website called BuddyTV. One way that he could try and grow his user base is to do a business development deal with other TV related companies such as TV Guide, Comcast, Timewarner, Verizon… The reason this is powerful is because if you can close a deal with someone like TV Guide, you then get access to all of their customers.

Harsh Fact #3: Grow your network wisely

It’s hard to put a value on networking, but it can really help your business as long as you have a strong network. Networking with people that can’t provide any value to you or your business is fine in small doses, but it can turn into huge time sync that won’t provide you with a return on investment.

At first you may have to network with people who don’t provide much value so you can get the hang of it, but you should shift your focus to networking with individuals who can help you grow your business.

Also, you have to realize that networking is a two way street. I don’t care how many big names you have in your network, it’ll be useless if you don’t help them out as well. Because when you need their help, they’ll be more likely to help you out if you’ve taken care of them in the past.

Harsh Fact #4: Build up your personal brand

Building up your business should always be your number 1 objective, but your number 2 objective should be to build your personal brand. Now granted, you can make millions without building up your personal brand, but it doesn’t hurt to have a strong one.

When my business partner and I started KISSmetrics we were able to get our first paying customers by leveraging our personal brand. People knew about him and I and companies that followed us were willing to sign on for our product because they liked my business partner and I. In the long run that won’t help you build a big business, but in the short it does help bring in revenue.

If you build up your personal brand, no matter what business you get into, you’ll increase your odds of making money.

Harsh Fact #5: Expand when your growth rate flattens

It’s always fun to start new businesses, especially if you have ADHD like me, but that doesn’t mean you should. If your current business is growing at a healthy pace, there is no reason to expand your business into new verticals.

As I mentioned above, Michael decided to expand his chiropractic business by helping other chiropractors get more customers from the Internet. But he didn’t start doing this until his own chiropractic business started to reach full capacity. There are only 24 hours in a day and there are only so many patients he can see in a day. Once he reached his capacity, he then decided to expand, while still maintaining his practice.

If you decide to expand your business, make sure you don’t neglect your current business and customers. You have to maintain it while expanding.

Conclusion

Don’t get caught up in businesses that are sexy and hot, focus on what you know. If you are passionate and knowledgeable about a specific subject, you can make money at it. You just have to get creative.

So what do you think about all these people that are trying to get into businesses that they have no clue about?

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I talk to a lot of companies that are still hunting for customer #1, or a few sales have been made but the ball isn't rolling yet.

Most of them are making the same mistake: Their public persona is exactly wrong.

I know, because I made the same mistake! But I learned my lesson, and I'd like to share it with you.

Even before I had a single customer, I "knew" it was important to look professional. My website would need to look and feel like a "real company." I need culture-neutral language complimenting culturally-diverse clip-art photos of frighteningly chipper co-workers huddled around a laptop, awash with the thrill and delight of configuring a JDBC connection to SQL Server 2008.

It also means adopting typical "marketing-speak," so my "About Us" page started with:

Smart Bear is the leading provider of enterprise version control data-mining tools. Companies world-wide use Smart Bear's Code Historian software for risk-analysis, root-cause discovery, and software development decision-support.

"Leading provider?" "Data mining?" I'm not even sure what that means. But you have to give me credit for an impressive quantity of hyphens.

That's what you're supposed to do right? That's what other companies do, so it must be right. Who am I to break with tradition? Surely my potential customers would immediately close the browser if they read:

Hi, I'm Jason and I built an inexpensive tool for visualizing what's in your version control system. It's useful for answering questions like "When was the last time we changed this file?" Check it out and tell me what sucks!

I mean, can you just imagine a person with "Software Engineer III" on their business card taking me seriously if I just talked like a human being? What if someone gets offended by the word "sucks?" No no, big companies want to see professional language!

But I was wrong. I'll explain why from the point of view of selling software over the web, but the same lesson applies to every little company trying to get off the ground.

Now repeat after me:

My next sale won't be a 1000-seat order from Lockheed Martin.
My next sale won't be a 1000-seat order from Lockheed Martin.
My next sale won't be a 1000-seat order from Lockheed Martin.

I'm telling you this having sold software to every size of company from micro-ISV to IBM, and, well, to Lockheed Martin.

Your vision is to land $100k deals with big companies — and you will! But not today. Today your product is a shaky version one-dot-oh with bugs you haven't uncovered yet, missing 80% of the features big companies require, and with no significant documentation like case studies or a proper manual or an ROI model or a large, reference-able customer.

Today, you're a complete mismatch with Lockheed Martin! But there's a nice big niche that's a perfect match: Early Adopters.

Early Adopters are people who want to live on the bleeding edge. They like new technology, even if that means it's buggy. They like working with teeny companies where they have a personal relationship with the founders, where they are showered with attention, and where their ideas are implemented before their very eyes. They don't mind putting up with a hundred bugs so long as they get fixed fast. They want to be involved in the process.

Tom is an Early Adopter. At Smart Bear I must have had ten or twenty of these guys before our product was stable enough and feature-rich enough to start getting attention from the big boys.

The best part is, this is exactly the moment in your company's life when you need Early Adopters to help you build the right product! You don't need people who download, get discouraged, and then never call you back. You need a chatty Cathy who wants to dive in and help out.

So now back to your website, your blog, your Twitters — your public corporate persona generally. What do you put up on your website that screams out to those potential Early Adopter Cheerleaders that you are exactly what they're looking for: A cool new company with a fresh product and fresh attitude; a product that might be rough around the edges but is ripe for feedback and collaboration; a company that may be small today but is thinking big.

Well here's how not to it: Say "a leading provider of" and blather on about how you "Provide the ability to quickly and easily do XYZ so you can go back to accomplishing high-value tasks."

Puh-leeze. Can you be more uninspiring?

Balsamiq Studios is doing it right. Read their company page. It's says "Hello."  It says "Yes, a couple of guys in a studio." They don't skirt the issues of being a small company:

I know, it sounds iffy: how can such a small team create, test, maintain, market, sell, and support a software company?

Well, that remains to be seen.

Balsamiq made $800,000 in their first year of operations, so don't tell me "big companies" need to hear garbage PR/marketing language. Balsamiq got 100 product reviews during their first six weeks of operation, so don't tell me "a couple of guys in a studio" isn't a good public persona.

You want that kind of success? Stop acting like a faceless, humorless, generic, robotic company!

Put yourself in the shoes of that Early Adopter. Does she want to see useless garbage phrases or does she want to hear about how you totally understand her pain? Should you come off as a big, established, safe company or as a cool, passionate, small team who wants to make a difference? Should you hide behind "Contact Us" forms or display your phone number and Twitter account on your home page? Should you promote features and benefits you don't really have implemented yet or should you promote your forums, blog, and weekly all-customer virtual meeting where everyone chimes in with feedback?

Be human. Stop hiding. Be yourself.

Today, Groupon did something that all entrepreneurs, in their heart of the hearts, wishes they could do: spur the big acquisition offer and swing for the fences.

I got home from Graphicly HQ today around 4pm. It had been a long week, but ended nicely. To celebrate, I took a three hour nap. At about 7pm, I woke up, walked over to the laptop, and started to work again. While, I was plugging away, a flurry of tweets flew by. Each with approximately this message “what the hell is Groupon thinking?”

My reaction: “It all changes when the founder drives a Porsche.”

A couple of years ago, when Twitter was contemplating a sale to Facebook for $500mm, I was talking to a VC friend of mine. The conversation went like this:

Me: “What the hell is Evan thinking?”

VC: “Well, he drives a Porsche.”

Me: “Are you saying that the Porsche is unable to navigate to Facebook’s offices so he can collect his bags of cash?”

VC: “Founders make different decisions when money doesnt matter. He doesnt HAVE to sell, so he can wait. He can do what he thinks is right for the business. He can focus on his legacy.”

Since then, the issue of founder cash-outs has fascinated me. How does it effect the ability of the founder to execute? Is it a detriment? Or is it the difference between the success of the mega-wins (Facebook, Groupon, Twitter, etc.) and the “just wins” (so many of the $25 – $125mm acquisitions we have seen over the past couple of years.)

During “AngelGate,” an email my friend Chris Sacca wrote was leaked. In it, he wrote:

4) Earliest stage founder cash-outs. Among efforts from others, we talked about my recent projects to get very early stage founders some liquidity. Traditional VCs have rarely been inclined to give founders any ability to cash out claiming it makes them less “hungry”. As someone who, just five years ago, had net worth of exactly zero dollars, I remember the difference between being “panicked” and “hungry”. As I have invested in more and more companies, I have learned that many founders would benefit dramatically from even the smallest amounts of cash (ed: emphasis mine) (compared to the overall deal size). I have worked hard to get my founders as little as $25,000 to pay off credit cards and student loans. Or, in a small deal that closed this week, I was able to get a founder the money so he can pay for his wedding and not have to worry about taking on debt. I, and the other investors in this group who do the same thing, feel good about helping our founders in this way.

What Chris outlines is very different than the money the Groupon founders took off the table when DST and Battery invested $135mm to solve “the money problem.” In Chris’ case, he is simply trying to keep the founders focus on the business, not on their climbing debts or horribly inadequate lifestyle.

With Groupon, with the money problem solved, they can “go for it.” Basically, the motivation for a big exit is no longer motivated by “how much money can I get,” it is motived by “what is my legacy.” That simple shift makes their rejection of Google’s $6B offer not that surprising.

 Mark Zuckerberg turns down Yahoo!’s $2B offer. They had raised enough money at that point, that clearly Mark had taken some off the table. He is also interesting in that it appears he has never been motivated by money (he turned down $2mm and a job offer from MSFT in high school).

 Evan Williams – sold Blogger. Not needing the money, rejects Facebook’s offer.

 Dennis Crowley (sold Dodgeball) and Naveen Selvadurai – took a couple of million of dollars each off the table in their last financing. And rejected a rumored $100mm+ acquisition offer from Yahoo.

And now,  Andrew Mason and crew have turned down a $6B offer from Google.

Surprised? Nah, the founder drives a Porsche. (BTW: I have no idea if Evan Willams drives a Porsche. He could ride a very nice SF hipster fixie for all I know.)