Web Marketing Today

iContact Founder on Entrepreneurship, Keys for Success

Many of us dream of launching a new company. Aaron Houghton, co-founder of iContact, the email service provider, has done it many times. His latest company is BoostSuite, a marketing platform for small businesses. He recently spoke with Web Marketing Today’s Kerry Murdock to discuss entrepreneurship, among other topics.

 

 

Kerry Murdock: You’re a serial entrepreneur, having co-founded iContact, the email service provider, and other companies. You sold iContact in 2012. When did you launch that company and why did you sell it?

Aaron Houghton Profile Image

Aaron Houghton

Aaron Houghton: “It was an idea that came out of a problem that a consulting customer had discussed with me back in the 2000 to 2001 era. I had a web software and web marketing consulting business at the time. One of our customers came to us asking how she could save money sending direct mail postcards to all of her seasonal customers that came to her business from all across the U.S.

“The solution that I built was an email newsletter tool that allowed her to send full-color HTML newsletters — which was what she wanted because she was coming out of the print world into the digital world — at a very low cost out to all of her seasonal customers. That idea turned into a product that I built and had a handful of customers until I met my business partner and co-founder, Ryan Allis.

“Ryan had worked in the marketing field for a couple of years as well, in high school. We were both very young and he used an email marketing tool that was somewhat competitive to the one that I built. He said, ‘Hey, there’s a big opportunity here. Let’s work on this together. I help you commercialize it and market it and you keep working on the product. I’ll figure out a way to sell it and market it.’

“He and I joined forces in July 2003 and officially co-founded the business, set up equity agreements between us, and hired some of our first team members — mostly on equity. That was actually one of the large driving factors for creating an actual legal entity for the business because we didn’t have a lot of cash to pay these employees. We had to convince them to come work for us with equity.

“Fast forward to February 2012 when we sold the business. We went from 15 customers to about, 75,000 to 80,000 at the end. About 20 percent of those were international, about 80 percent in the U.S. We built the business with about 330 full-time employees and about $50 million in annual revenue. Ryan and I had been working on that by the time 2012 came around. For a decade, I’d spent pretty much every waking day of my entire 20s — from 20 to 30 years old — working on the business and getting up every morning thinking about how to solve big problems.

“It was a great opportunity when Vocus, the company that acquired us, came to us and talked about buying the business. It was a great opportunity for me personally to get out and work on new problems. Ten years, from 20 to 30, was a third of my life at that time and I was really excited to look at new opportunities and also to hand the business off to a company that would continue to grow it and take it very seriously.”

Murdock: Web Marketing Today is an iContact customer.

Houghton: “That’s great. Thanks so much.”

Murdock: You’ve launched other companies, in addition to iContact. Tell us about your background, your education, that sort of thing.

Houghton: “My interest in technology started really young. My parents are professors. At the university, my father is in a specialty where he teaches middle-grade teachers how to use technology in the classroom, how to build technology into their curricula. I think it was in 1989 to 1990 era when he showed me how to use the basic programming language on a Mac — I think it was an Apple IIGS — to write an alarm clock that would wake me up in the morning.

“Ever since then, I was kind of a tinkerer of technology. In the early 90s, I learned how to illustrate with some simple software on a Mac and actually illustrated three books that my parents published on electronics and circuitry. Then, oddly enough, years later, they actually published one of the first books on Internet search engine searching strategy, essentially the logic that goes into searching a search grade structure.

This kind of stuff was ingrained in my blood a little bit. I started at the university at UNC-Chapel Hill in 1999 — here in North Carolina, in Chapel Hill. I decided to study computer science because I’d picked up the knack for technology as a kid. I was one of the odd computer science students that spent very little time in the computer science building. I did what I needed to do there but spent most of my time working on business models. I was writing software and trying to figure out what it could do online, then hanging out at the business school as much as I could to try and get professors to give me free consulting advice for the businesses that I was trying to launch.”

Murdock: Do you still write code, 10 years later, after having launched iContact?

Houghton: “I don’t. I actually have not written code in about five years and it tears at me a little bit because I love writing code. I think I’d spend all my time doing it if I got back into it again. If you don’t write for a couple of years, you get rusty. So I like to work with people who are brilliant and keep up with that stuff better than I do now. In my new company, I’m not writing any of the code now.”

Murdock: Many of our readers are small business owners themselves, entrepreneurs. What are the main requirements for a successful entrepreneur?

Houghton: “There’s certainly no path that you must follow to be successful. I’ve seen so many different ways. I like to study business models and study entrepreneurs and learn about their stories. I’ve seen so many of them and over the years. There’s certainly no one way to do it. If there are some characteristics that entrepreneurs have, then I think these are a few of them.

“Vision is certainly the first one and I think it’s maybe the easiest one to find — or the easiest one to have — which is the ability to creatively solve problems. Someone brings a problem to you and you don’t bring back the normal solution. You bring back something that’s either faster, more cost-effective, more elegant, or somehow more pleasing to what their total needs are. That’s a baseline. You have to have a vision in order to get started as an entrepreneur.

“You also need a great deal of perseverance. Call it persistence, call it stubbornness, but you’ve got to be able to stay on track and know that your vision is the right vision and that you’re going to continue working on it. Now, you also have to be not too stubborn so that you can take feedback. You can even move in a new direction if you have to. You have to continue working on your vision even when everyone or most people are going to tell you that it’s not a good idea or it can’t be done. That’s very, very common.

“The last piece to really grow and be successful as an entrepreneur is flawless execution. Maybe it’s not as much flawless as it is just ruthless. If you have 200 items on your to-do list that you’ve set to help you hit this strategy and bring this vision to life, you’ve got to do all 200 of them. Just having the vision and setting out the plan and charging ahead even though other people say you’re wrong, isn’t good enough. You’ve got to actually complete the job all the way to the very last brick.”

Murdock: For readers that are contemplating launching their own company, what’s your advice to them?

Houghton: “My advice is to ignore a couple of the big myths — especially if you watch the big glamorous stories or if you watch too much ‘Shark Tank’ on TV.

“One myth is that it happens overnight; it happens quickly. If you look at some of the biggest companies in the U.S., they’ve been around a lot longer than you think. A lot of these companies were really something else before they became what they are now.

“The second myth is that successful entrepreneurs put all their eggs in one basket. I like to say, ‘Don’t risk it all. Test it all.’ My point there is you can learn a lot about the opportunity that exists in some business model or business idea that you want to go into before committing everything you have into that idea.

“It’s going to take some time or some money, but don’t pick up shop, quit your job, move to San Francisco, take all the money out of your retirement fund and then ask 10 people if they want to use your product. Assume it’s going to take a long time and figure out ways to test all the assumptions that you built into this idea as cheaply and quickly as possible.

“I’m a living example of this, not because I knew to do this right, but because I just kind of accidentally did it right in some ways, and iContact was probably my 14th business that I’ve ever launched. It was the only one where I’ve had a large successful exit. I’d had another smaller exit a few years before that was just about breakeven. The others were at breakeven or below. In order to survive as an entrepreneur through a 15-year career, about 15 companies, that means I’ve had to figure out how to fail and move on without losing everything.”

Murdock: Tell us about a decision or two that you wish you would have done differently.

Houghton: “I’ve learned some lessons around friends and business. I always give the advice to be very careful if you’re launching a business taking money from friends or family. I actually entered into a kind of business relationship with a friend once, and ultimately I wish I hadn’t. I like to keep the two things separate. I see very few examples where I think that works out really well.”

Murdock: You sold iContact about a year ago. What are you doing now?

Houghton: “I like web marketing and software products for small businesses. I’m working on a product now that we just launched in August 2012 that’s meant to help small business people figure out all the marketing data that’s flowing into their business.

“The company is called BoostSuite. We have a product that starts out free and it basically looks at a small business’s marketing data and analyzes it and turns it into a prioritized to-do list of simple tasks that anyone can follow. You can think of it like a web marketing expert in a box. It’s a big problem because the proliferation of marketing data over the last five years. It’s just exploding.

“A lot of small business owners just can’t keep up. So I’m building a product that analyzes all that data for them and just tells them what they need to and what they need to spend their time on.”

Murdock: Give us an example of how that works for a small business, say a small service provider.

Houghton: “One of the most popular and most efficient techniques for marketing a business online is writing good content that helps solve people’s problems — for instance, a topic that one of your target customers might be interested in. Let’s say you’re a locksmith and your customer has this question, ‘I just bought a new house. How quickly should I change the locks?’

“Writing a piece of content about that topic is something that is very valuable for that locksmith because it’s actually going to perform better online than a paid advertisement that they might try and kind of inject in front of someone who is looking for locksmith services. A piece of content that a business can write is oftentimes one of the best things they can do to get results online.

“Our product will look at your website visitors. We look at your website data and tell you what the right topics are for you to write your next piece of content on. If you’re going to get up this morning and write a blog post, we tell you the topic that you need to write it on for your unique business. We’re analyzing your own marketing data and telling you where the opportunities are in it.”

Murdock: I asked you earlier about successful qualities of entrepreneurs. Tell us some companies or entrepreneurs that you admire one way or the other.

Houghton: “I like the entrepreneurs that just go after ridiculously large problems that don’t have obvious solutions. I love business models that take advantage of social behavior around social media or just people. I think they are really interesting.

“Just two examples off the top of my head. Dropbox is a business that most of us know for sharing files back and forth. The reality of why Dropbox works so well is that it’s really very social. It’s not as much transactional. It gets more ingrained in your life, like, ‘Hey, you and I both like music that we want to share back and forth with each other.’ Or, ‘You and I both like photos that we want to share back and forth with each other so we’re going to create a shared folder with our group of people.’

“That phenomenon is why Dropbox used to pay, I think, $140 to acquire a customer that pays them $50 — a completely upside down business model. Now they pay nothing to acquire a customer that pays them a good amount over time. It is a brilliant model.

“Another example is LogoTournament and similar sites where you have people competing to provide services. You get a lot of social dynamic that comes into the business model so people are actually competing to win as well as competing to make revenue and it creates a powerful marketplace where you can drive prices down and bring services at a great cost to an end-user.”

Murdock: Anything else?

Houghton: “Yes. Business owners that are running service businesses or thinking about running service businesses have one of the biggest opportunities in front of them. The whole iContact story starts with me running a web consulting business. The reason I say that is because these folks know all of the problems that exist today. Their customers are bringing them those problems on a daily basis. Entrepreneurship is all about finding new, creative, better, faster, lower cost solutions for the same old problems. I think there is a huge opportunity here.

“I’ll end with a note I heard this a couple of years ago. I was in Boston at the time. Someone said to me, ‘It’s not a competitive advantage if someone else can say they do it,’ — with the emphasis on ‘say.’ Even if they can’t do it, if they can remotely claim they can do it, you don’t have a competitive advantage and that’s one of the biggest things that stuck with me over the last three or four years as I exited the iContact business and started building this new business, BoostSuite.

“It all comes down to the famous mantra out of Apple years ago, ‘Think different.’ If you want to succeed, find a different way to solve a common problem.”

Kerry Murdock
Kerry Murdock
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Comments ( 2 )

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  1. MMag January 22, 2013 Reply

    Great article … until I got to the ‘contests sites are great!’ bs.

    People competing for less and less money, crumbs from clients who don’t want to pay for professionals, takes advantage of students, destroys professions.

    Working for nothing unless you ‘win’ is not capitalism.

    Pretending that these are ‘contests’ is nonsense. This is just a race to the bottom that no one can win, neither service providers nor clients (who get substandard work that is not effective).

    • Aaron W. Houghton January 22, 2013 Reply

      Hi MMag, thanks for reading and I appreciate your comment and perspective.

      As I mentioned in my story I spent many years running a digital marketing agency that catered to small business customers. During those years I often found myself on your side of this argument, explaining to customers why our pricing for creative development was necessary to their success. Our full time, salaried, professional designers were not free… we simply had to charge what we had to charge to deliver a high quality end-product. Let’s say that price was $1,000 for a very high quality business logo. Just picking an arbitrary number here… not trying to suggest this price.

      For every small business in the world that can afford this, this is the best solution available to them. But the reality is that there are millions of super small, one-person, work-at-home, or part time small business owners who will never be able to afford the lowest available price for a logo that can be made by a professional US-based web designer. Based on my research there are several million businesses globally that have a total annual marketing budget of less than $500 US dollars. These are people who use their businesses to gain more freedom in their lives, pay for family vacations, or put money into their savings accounts.

      Tournament sites have a proven ability to drive pricing down which creates a class of services that are within the reach of these millions of small businesses. The good news for design professionals is that you’ll never have these businesses as customers anyway. They just can’t afford you. So, nothing is lost.

      In closing I must also mention that sites like this are open marketplaces. Customers don’t have to choose to use them. Customers don’t even have to choose to use a logo that is created on them. Designers also don’t have to agree to produce logos for tournament sites. The fact that these sites remain profitably in business validates that there is a market demand for them.

      I’ve also based my opinion here on my wife’s experience with using a similar logo design service for her business http://www.bellabeanorganics.com several years ago. She was happy with the final logo and received many nice comments on it from her customers, partners, and from the company that acquired her company a few months ago. Could it have been better? Sure. Was it exactly what she needed at a price she could afford at the time? Yep.

      Again, these are just my opinions and personal experiences. I’m sure others have had different experiences.

      Thanks again for reading and I really appreciate your comment.

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