Finding the Unicorns Amongst the Donkeys – Interview with Larry Kim

19 Minute Read | Interviews

With four award­-winning books under his belt, Larry Kim is one of the most recognisable faces in digital marketing. Best known as the founder of the pay-per-click management service WordStream (and most recently a chatbot service
Mobile Monkey
), ­Larry has grown his pioneering company into one of Google’s most trusted allies.­ Yet he’s way more than just a PPC expert, Larry is also a prolific and highly skilled content creator with works published in pretty much all of the leading digital marketing blogs and publications, including The Wall Street Journal, Business Insider, Forbes and Inc.

Larry Kim Interview - Finding the Unicorns Amongst the DonkeysPhoto courtesy of Larry Kim – Slideshare

Today, Larry is WordStream’s Chief Technology Officer, but despite the pressures of the position, he still manages to pump out a huge amount of content and somehow finds the time to fly unicorns… Sorry drones, fly drones…

So get into your favourite reading seat and buckle up… here we go!

Woj: Welcome to Sydney, Larry!

Larry: Hey, thanks Woj. Thanks for having me.

Woj: You’ve grown a very successful startup. Most startups have co-­founders, but you defied that norm.

What are some of the advantages you faced growing WordStream solo?

Larry: Well, there’s less dilution. If you have three or four partners, which is typical, you’ll go in all equal partners or something like that. And so, having the whole company versus a quarter of the company out of the gates is advantageous, I suppose, from an ownership perspective.

Woj: And also decision making.

Larry: Yes, yes.

How did aversion to doing stupid, repetitive things help you scale?

Larry: Yeah, I guess you’ve been reading some of my stuff. Yes. So I’m allergic to doing stupid things over and over again. In fact, it’s because I’m lazy and if I see myself doing the same thing over and over, I’ll want to write a program that does it for me.

So my backgrounds in electrical engineering and obviously software engineering are a big part of that. So yeah, it was just certain PPC marketing tasks, and SEO tasks around human research grouping and optimising certain things over and over.

What’s been your biggest challenge scaling WordStream?

Larry: Well, it changes depending on the life cycle of the company. Early on, when you’re starting a company, one of the hardest things is recruiting because you have to convince people to quit their good paying jobs to join this thing with nothing. Well now that we’re big and established, recruiting isn’t really the challenge. We’ve got more applicants than we have job openings.

So at different stages it’s different things. I would say currently, the two challenges facing the business are consistently building super-amazing high quality unicorn level software that really meets the demands of exactly what the users are hoping for, and scaling up the lead generation. The challenge is that we’re generating something like 30 or 40,000 emails per month, so that means if I want to increase it by, say, 70% this year, that means I need another 30,000 more emails per month. You see what I’m saying? Keeping growth high when you already have a big company presents its own challenges as well.

Woj: So let’s take it back to when Wordstream had fewer than 10 employees. What were some of the challenges then?

Larry: I think one of the biggest challenges early on was this notion of product­/market fit. Okay, so you’re building something and you hope it’s what the customer wants but you’re not really sure because you don’t have enough customers to know exactly.

Your first couple of customers are not actually a good sample. They’re just your friends and family. They’re biased. They want to believe and they want to support you, so they’re actually really bad customers to base your decisions around.

Woj: You might not have the right application for it.

Larry: Yeah and you’re bending over backwards for these early customers because you’re trying not to lose them. You’re not thinking strategically in terms of what would be the solution for everybody as opposed to what would be a one­ off solution for this, my tenth customer, which was like 10% of my business. So it’s just product­/market fit and really nailing it to make sure the product that you have is aligned with the target market you’re selling to.

And what was your most scary entrepreneurial moment?

Larry: Early on, oh jeez, how much time do we have?

Woj: Pick the first thing that comes to mind.

Larry: Running a venture backed business is very challenging, Woj. One of the reasons is I raised a lot of money, and that means you’re hiring ahead of revenues, okay? So you have a certain amount of revenues but your expenses are much higher initially, and the challenge is that you create a burn rate. So you might be burning $200,000 to $300,000 a month and only generating $50,000 of revenue, so there’s a big gap, you’re not yet profitable.

The challenge here is that you have to get the next round of financing. Most of the costs are just people, and you can’t just terminate people for a couple months and then bring them back on. It doesn’t work that way. It’s not like raising and lowering your budget on an ad spend or something. So it’s like you’re running as fast as you can but there’s a cliff. You have to get there having built some kind of glider or something so you cannot fall off the edge.

Woj: So it’s like you’ve got these static targets but you’ve got these dynamic expenses?

Larry: It’s like you jumped off a cliff and you need to build the parachute as you’re falling. So that’s one challenge. There are so many other challenges. But definitely fundraising is a big one. And I think really what you’re doing is you’re creating a vision for the company that doesn’t yet exist, but you’re projecting what you want it to be and then getting people excited about this thing that hasn’t yet materialised.

Do you think the injection of capital has helped a lot? Or do you think things would have been different had you not sought out funding?

Larry: The funny thing about software is that it’s ridiculously expensive to create. We’ve got 30 engineers and they’re not cheap, and if you’re in a competitive market place… actually most of the other competitors in my space have actually all gone bankrupt or are not doing so hot.

But initially when I started seven years ago, there were a lot of other companies that were chasing the same market and so the idea of going to market without some kind of accelerant that venture money provides, you’re at a significant disadvantage. I think venture money is really great for situations where you fear that you have a limited time window to execute.

How important is getting the culture right and how did you instil a successful one amongst the team?

Larry: It’s so funny. It’s not like on the first day I said, “guys, here’s the culture of the company. You better do this and that.” But people, it’s really funny; they take cues from your behaviours and what you do. So I’ll just give you a crazy example. I noticed early on when we were a small company, the new hires would show up to work wearing a shirt and tie or something like this or some nice business attire, and then within a week, it would degrade to shorts and cargo pants or whatever, because I wasn’t dressing up very well.

Then later, I figured, what the heck, I’m going to start investing in some better clothing. I look like a bum. Then within a few months the whole office was dressing better. But in terms of what WordStream stands for, one of the things that I’m really passionate about is all this blogging and coming up with crazy ideas and thought leadership and so that ends up attracting the types of people into all these crazy marketing hacks and ideas. You see what I’m saying?

Woj: Must be a lot of unicorn fans.

Larry: Exactly. So I think it’s part of the DNA of the founders. It just becomes the company culture. And so you just have to be mindful of that and be careful of what you’re projecting because that has a tendency to get adopted, which is a lot of pressure.

Woj: I have to be honest. I see a lot of your content everywhere online. Do you have a certain quota to fill to please the shareholders?

And have you worked out a value of each piece of content?

Larry: Oh, well there’s tremendous pressure for growth when you take money for venture-backed companies. I’m not interested in some kind of lifestyle business where you’re making a few dollars profit every month. This is not a services business.

They want to see 50 to 100% year ­over­ year growth rates and that’s just how the game is played. So I do produce a lot of content, and I do a lot of stuff on social, and that’s because that’s actually one of the most leveraged forms of marketing. How else will I get a million more people to be familiar with my brand? It’s hard to do that using cold calling for example. You have to do it in scale. So yeah, it’s like I was saying earlier. When you have 30,000 emails you’re generating a month and you have to double that, it requires a considerable amount of input. It doesn’t happen by itself.

Woj: Yup.

How much time should you invest in content promotion versus content creation?

Larry: Well, I don’t view them as separate. I view them all as part of the content thing. Obviously, why would you create something if not to promote it? So basically what I do is I come up with a bunch of ideas, maybe for a month it might be 10 or 12 pieces of content. Then I’ll audition them organically, see which ones are getting the most likes and shares and traffic, and then I’ll go all in on one or two of them.

I pay to promote, well, I call them unicorns because they’re the most beautiful or most remarkable rare things that are out there doing amazing things, and I’ll pay to promote those on Twitter and/or Facebook. The thing is, you don’t have to pay that much money if the engagement rates are high because those platforms reward high engagement. So you end up with very low cost per clicks.


Woj: Sure. So to that point, I’m a big fan of your organic and paid social networking pyramid scheme.

Larry's Organic and Paid Social Network Sharing/Posting Pyramid Scheme
Image Credit: Larry’s INBOUND15 deck

Have you experimented with adding Twitter ads, LinkedIn ads, or content distributors in the mix?

Larry: Definitely Twitter ads. Twitter ads is a fantastic avenue because it’s very cheap. There’s just not a lot of competition on there compared to Facebook. They may be making less than a billion dollars, while Facebook is making 15 or 16 billion dollars a year. So I definitely do a lot of advertising on both Facebook and Twitter.

LinkedIn, I think they’re something else. The people who use LinkedIn are people looking for a job or it’s a recruiter trying to fill a job that they’re trying to hire for or it’s a salesperson trying to navigate to the Director of Information Technologies and so there’s other solutions. So I personally haven’t gotten as much mileage from LinkedIn.

Woj: It’s more expensive, as well.

Larry: It’s like six dollars a click. I can get the clicks for like one penny on Facebook. I just think LinkedIn is, well, the thing I really love it for is LinkedIn Pulse. You don’t even have to pay for that. It links your blog posts to your profile, and then your connections get notified of that. And so if you have a lot of connections, if people start liking that content, then it gets broadcast to their connections. It doesn’t cost anything.

Woj: It’s a good channel in that regard.

Larry: Yeah, so I’m really excited about LinkedIn from a content marketing perspective, but more so for the organic perspective as opposed to the ads.

Woj: Okay. There’s a certain amount of precision and focus to your marketing.

How do you prepare? How important is it to practice and fail from those potential experiments?

Larry: In some ways it’s like, “Okay, I get it.” WordStream didn’t start out with millions of page views or visitors per month on the blog. We started out with zero. So a certain amount of it doesn’t matter. It’s more about consistency. As long as you’re putting away one or two posts a week or a month.

Woj: Certainly consistent. You’re appearing everywhere. It’s the Larry Kim Show!

Larry: It’s more to do with consistency. Whatever time you can budget, make sure it’s a weekly or monthly thing, even if it’s an hour. Also, it’s important to fail? By definition, only one percent of your stuff is going to really succeed. Even someone like me.

I think there’s a notion out there that every piece of content that we produce can be successful, but that’s just not the case is it?

Larry: No, no, no. 1 or 2% will be home runs and 98 percent will be donkeys. But I’ve gotten better over the years. The more you do it, the better you get at it. You have this knack for “I think this will go viral.” So when I was starting, it was pretty bad. It would be like 1 in 50 or 1 in 100. Now it’s more like 1 or 2 out of 10. So I’ve improved my success rates by about 10 times, but it’s still not a sure thing.

So you’re asking, “What about failure?” and all this stuff. I don’t view it as failure, I just view it as trying out different ideas and seeing what resonates.

Woj: It’s feedback.

Larry: Yeah. There’s certain hot button topics that your audience will really love. People want to know the secrets, right?

So one of the things I figured out early on was if I created and themed my content around this notion of hacks, like crazy hacks, like unusual tips and tricks that actually produce unusually weird results, that my content would do really well.

And so I think if you look at the content, Woj, a lot of it has to do with these unusual things that I see during the day from having worked on so many different accounts.

Woj: That’s cool.

How do you know when PPC or Google AdWords is not a good channel for your marketing efforts?

Larry: AdWords contains a lot of different types of advertising. It could be Google display network, it could be search ads, it could be Gmail ads, YouTube ads, but I think what you’re referring to is the search ads, correct?

Woj: Yeah.

Larry: Generally, search ads are not a good idea for your business in a couple situations, but it tends to be where you’re producing something new and innovative that nobody is searching for because it hasn’t been invented yet. So you’re going to be challenged with low search volumes. That’s generally a killer. But that’s not to say that you can’t do other forms of Google advertising, like display advertising for example. You could target people who read Tech Crunch. And then there’s a chance that those are the types of demographics of people who might be also interested in learning about the software that you’re producing or something like that.

What’s the most interesting AdWords blunder you’ve seen when taking over an account?

Woj: We recently saw an account that paid $80 for, “How to cook a chicken in the oven” for a business that did oven repairs.

Larry: Geez… one funny one that comes to mind was that a company was bidding on the word “keyword” because they had uploaded a list of keywords but forget to exclude the “header” row, which contained the word “keyword.” And so that was draining a good amount of the budget. I have no idea how this happened, but it was pretty funny.

Woj: You know how you get those outsourcing emails that try to get you to sign up for SEO services? I once contacted an Indian company saying my company was called “Click Here” and I wanted them to rank me number one for “click here,” and they were like, “Yes, we can do this.”

Larry: “Guaranteed.”

Woj: Maybe I should’ve persevered with the experiment. It would’ve been funny.

Do you use similar audiences based on a cookie pool of your product subscribers in order to attract new users?

Larry: It depends on how big your audience is.

Woj: I mean particularly in WordStream.

Larry: Oh. Yes. Because the challenge here, as I was mentioning, is that we need to generate tens of thousands more leads per month, so similar audiences is not going to be as good as your first party marketing audiences on it because they’re not as familiar with the brand. But it’s going to be better than just interest ­based targeting.

Woj: It’s a different entry point of the funnel.

Larry: Somewhere in the middle actually. Marketing is obviously the best, and then just targeting people by generic interests is probably the least attractive and then somewhere in the middle is similar audiences.

Woj: Yeah, cool.

So name two of your favourite thought leaders who are crushing it with content at the moment?

Larry: Let’s see.

I think Rand Fishkin is killing it with video content. He’s a genius. What’s so interesting about Rand is that every quarter or so he kind of changes it up and becomes known for some other topic. From that perspective, he gets a ton of respect from me for his breadth of knowledge, to be able to pivot from talking about the business of software to entrepreneurship to keyword insertion and blah blah blah. He’s constantly challenging himself.

Woj: There’s a really good post he did recently where he covered the eight things he learned about operating a software company, and then, I think, a few things he’d change and a few things he wouldn’t change. It was really good. Just so many unicorns, I suppose, in there.

Larry: If he were here, I would tell him, “I’m with you on pretty much everything you’re saying there.” The only thing I worry about is sometimes I feel like he’s always beating himself up. You know what I mean? And I just wish he would be more of a glass ­half ­full guy. Because remember how I was saying earlier about projection and the impact of your behaviours and your essence on the company culture and so on. You always want to be positive.

Woj: Yeah. And another thought leader?

Larry: Other than that? Let’s see. I read a guy named Jeff Haden, he’s the number one columnist at Inc Magazine, but it’s general business content, it’s not search marketing related.

Woj: I think we all need to broaden our horizons.

Larry: If you’re looking to read about leadership and what inspires people, I would definitely recommend Jeff Haden.

What’s the next most important thing you want to learn?

Larry: I’m really obsessed with Facebook ads these days. I think the targeting is really compelling in terms of being able to go after so many different demographics and interests. Definitely Facebook advertising is probably the top of the list. Are you talking about marketing stuff that I’m interested in or stuff in general?

Woj: Anything. I know you fly drones, so what’s the next thing that you’re excited to learn about?

Larry: I have a one­ year-old boy. You can follow him on Twitter. It’s #PPCkid. Basically I’m really looking forward to being a part of his journey. Teaching him new things and just being a part of his life.

Woj: Okay, cool. And finally, you’ve previously mentioned the power of projection and its importance.

So what’s your vision for the next five years for WordStream’s business and Larry as an individual?

Larry: Well, WordStream is already one of the largest PPC management software companies; we manage something like $500 million of ad spend annually.

Woj: I think in an interview I read that you pretty much manage 1% of Google’s total revenue.

Larry: Half a billion dollars is one percent of $50 billion. That continues to grow and we’re one of the fastest growing partners, not only one of the largest but we’re also one of the fastest growing.

I’d love to have that kind of stature amongst other ad platforms, such as Facebook or other places where we’re investing so I think of it as a platform for paid media but cross channel, whether it’s Facebook, Google or anything else, like Bing ads. All of the above.

In terms of me personally, I’m just looking to have fun and meet new people. It’s funny, I was talking to some other industry people and I think I’m a little different from most of the others in this industry who are going to be doing this for life. For me, this was always just a thing. I could see myself doing other things outside of marketing.

Woj: You’re an engineer; you’ve got to fix the next thing. World’s full of problems to solve.

Larry: Yeah. I think just for me personally, I could see myself doing something weird and different, now we’re talking longer term. Obviously, I’m committed to growing the company into as big and as great a company as can be, but after that, it’s quite possible that I’ll do something completely different, take on a new challenge.

Woj: Cool. Thanks so much for your time, Larry, I really appreciate it.

Larry: Awesome, thanks so much.

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