Lessons From The High Volume Business – Scaling Hootsuite, Vidyard & Constant Contact with Steve Johnson

On this #Marketing edition of Seeking Wisdom, DG syncs up with legendary marketing operator, Steve Johnson. Together they discuss his time at Constant Contact, Hootsuite, Vidyard and more.

You can get the #Marketing podcast on Apple PodcastsSoundCloudSpotifyStitcher or wherever you get your podcasts. Or listen to the full audio version below 👇

Like this episode? Be sure to leave a ⭐️⭐️⭐️⭐️⭐️⭐️ review and share the pod with your friends! You can connect with us on Twitter @davegerhardt @seekingwisdomio.

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In This Episode

0:33 – Intro with Steve Johnson
1:29 – The rise of social media
2:31 – Hootsuite and social media
3:51 – Lessons from the high-volume business
4:16 – Lessons from Constant Contact
4:34 – Fremium
5:43 – How did Hootsuite grow?
6:33 – Community marketing
7:25 – Ambassadors to reach area influencers
8:16 – Hoot-ups
10:52 – South by Southwest and an owl bus
12:02 – All a matter of marketing and public relations
12:34 – The move to enterprise
14:46 – The proliferation of free/enterprise combinations
15:44 – A lesson from Survey Monkey: switch to annual subscription
17:12 – A lesson from Survey Money: use an agency
17:28 – The most recent parts of Steve’s journey
17:40 – Lessons from Hootsuite: purpose and model
18:26 – On the need for an international move
19:24 – Things learned from Vidyard
20:45 – GoVideo success
21:30 – Fremium is good for horizontal markets.
22:25 – The attitude needed to build a big company

Full Transcript

Dave Gerhardt: Hey everybody, we’re back. Steve Johnson is here in town, and we said, you know what while you’re here why don’t you come by and let’s talk about marketing and SaaS and whatever else you’ve done. And so I’m super excited to talk to you, ’cause I’ve known of you, and then we worked at the same company together but didn’t really know each other then. I just through osmosis have learned a bunch of things from you over the years. So I wanna try to unpack a couple of those lessons.

Steve Johnson: Absolutely.

DG: How do you describe who you are and what you do?

Steve: That’s a good question.

DG: You’re always kind of operating guy, right?

Steve: An operating guy. I look at solving real problems, so I love that kind of stuff, something that’s real. I also am purpose driven, so I like to have something that’s got meaning to me.

DG: Let’s rewind. Back from Constant Contact, Hootsuite, Vidyard, give me the last 10 years.

Steve: Sure. We ran across each other at-

DG: Constant Contact.

Steve: Constant Contact. Then I came in as CRO at Hootsuite, employee 27, just when we started monetizing it. So Vancouver, and did that five years. We went from 27 to 1000 people, grew all around the world, and some great revenue. Now it’s $150 million.

DG: What was it when you joined?

Steve: It was $300,000 revenue. I turned it down a couple of times because I wanted to wait and see if somebody wanted to pay for this. So Ryan, great guy, but he pinged me and said, “I’ve got this free product, we’re gonna start monetizing.”

DG: That was a super interesting era.

Steve: How long were you at Constant Contact?

DG: I was there two years. Two years from-

Steve: You had to learn the volume business.

DG: What…2009 to 2011 would be my guess. ‘Cause I was there 2011.

Steve: Yeah, 2009 to 2011.

DG: And so at that time was I think the rise of social media. Right? Because there was a lot of stuff happening at that time. It was like, Facebook was blowing up. Instagram was just blowing up, it had just been acquired by Facebook. Twitter was just starting to take off. LinkedIn obviously was a platform. Google+ was a thing back then, all these social channels.

Steve: Oh man, we were a premier partner on that, and thought this was game-changing.

DG: Right? And I actually remember being at Constant Contact, there was a social media marketing product for Facebook. And Facebook pages used to be able to basically gate your Facebook page, you remember?

Steve: Oh yeah.

DG: It was like you have an offer and say, “Hey, I’ll give you a $2 coupon if you like my Facebook page.” Facebook then demolished that, they opened up this whole-

Steve: Killed a whole bunch of companies.

DG: There was a ton of companies that had just made up apps on social media. And so my guess is that during that time, which is the rise of social, Hootsuite started to blow up because there needed to be some way to manage all these channels. I remember at Constant Contact there was four or five people on the social media team using Hootsuite.

Steve: It was interesting. People thought originally it was a stupid idea. I got told many times that I was making the dumbest career move of my life.

DG: What, leaving Constant Contact to go to Hootsuite?

Steve: I was an enterprise guy, wanted to learn the volume business, so Constant Contact was the best at that at that time. Learned a ton, but to me it was sort of just self-obvious that social media was just yet another communication form. So you first do face-to-face, then the mail, then the fax, then E-mail … fax, phone, E-mail, whatever the order is … and then social media was just the next logical iteration. The world has shifted, and companies … if you thought social media was a fad, then you didn’t need Hootsuite. If you thought it was real, then are you gonna manage it all natively? No.

We were underfunded at that point, so we had $1.9 million in funding, couldn’t get funding. All the smart money was on Seesmic, if you remember Seesmic. Marc Benioff, Reid Hoffman, all these guys, they’d raised $20 million to our $1.9. And as soon as I joined Hootsuite, Twitter bought TweetDeck.

DG: TweetDeck. Ohhh.

Steve: I use TweetDeck, I love TweetDeck. I thought we were hosed, this is awful. So we were a Twitter tool only. That’s when we added Facebook and started adding these other platforms. Now there’s like 150 platforms.

DG: Actually, I think a great focus for this episode would be lessons from the high-volume business, so let’s unpack some of those. But first, what was the playbook at … Well, I wanna talk about all of them, wanna talk about lessons from Vidyard, wanna talk about lessons from Hootsuite, lessons from Constant Contact. But there’s kinda some key themes along the way.

Steve: Absolutely.

DG: What things did you see work really well from Constant Contact that you then took to Hootsuite and said, okay, there’s 30 people here, here’s what we’re trying to get to, my first 90 days/three months/six months I’m gonna do what?

Steve: What I took from Constant Contact was definitely the rigor and the data analysis of things that you need from a volume business. So looking at all this page user acquisition, making sure you’re constantly iterating the iterating and testing all this kinda stuff. So we did that, leveraged the pro business really well. The other thing I took away from Constant Contact was really the freemium, looking at MailChimp. The freemium really works, so our brand preceded us.

DG: Can you unpack that? ‘Cause we worked there, so I don’t think most people know the story. But Constant Contact did not have a freemium E-mail model. MailChimp came into the market and basically started to eat a big portion of that by having free.

Steve: Yeah, and Ben Chestnut wrote a blog on it, don’t know if it’s still up, but I can remember reading this before I went to Hootsuite. He told this whole story basically. The whole thing was how do you get people into a product, into the business. And they started late in the game, they didn’t start with a freemium like Hootsuite started with a freemium. They added it later on, and the numbers were just … it was just a home run.

DG: So did you add freemium when you were at Hootsuite?

Steve: We had free to start with, and then we added pro, then we added enterprise. Those are the three things that we added. I think it was roughly half a million free users when I joined. When I left we had 15 million free users. And then the pro product was … I remember we were adding like 100 pro per day, and then the weekend it would dip. After a while we broke the 500 a day, on the free signups I should say. Then finally you get to the point we were signing up 10,000.

DG: How were you growing that? And maybe the answer is just dump a bunch of money into SEM and paid, and-

Steve: Yeah, big question. Initially we didn’t have any money. We had a million nine, and then we got a $3 million convertible note. That’s the untold story of Hootsuite. It was actually a very capital-efficient business. People heard we raised $250 million, but that was years later, and most of it didn’t go into business.

DG: So the growth in the freemium model was not relying on paid, what’s the playbook?

Steve: The playbook we looked at, and we said, “Get at $5,000 a month in marketing spend.”

DG: That was the budget? That was the marketing budget?

Steve: That’s the budget. This included paid users, this included everything. You remember the book Flip My Funnel? We had a lot of raving fans out there that loved our product. So our whole marketing team-

DG: Joe Jaffe, John Jaffe.

Steve: Yeah. The whole story was community marketing. We’ve gotta go after this community marketing, so we would start and find all these influencers that liked our product. That was our vehicle, and we got a bunch of interns that would come in. So whatever market we wanna go into, we go okay, we need somebody in Vietnam. We would get an intern in, and it’s almost like radio. You could see the community marketer would start working, and you’d start to see the lift in signups.

DG: From that geo.

Steve: From that market, from that geo. I remember you could just do it by clockwork.

DG: Would the intern actually be at Hootsuite?

Steve: We would try to bring him over for a summer or three months.

DG: And they would focus just on that?

Steve: Yeah.

DG: And how do you do that from an office digitally? How do you drive signups in Vietnam?

Steve: It’s all based on finding who the influencers were in Vietnam.

DG: Okay, this is amazing. So the playbook is, you guys had a bunch of free users. You find out where the really passionate ones are. And then what, do you give them swag and make them feel loved and-

Steve: It’s really a fascinating story. Again, we had no money, so we would get these interns where you just pay barely anything we could do to scrape together to pay ’em. You have three things you’ve gotta do as an intern, or as an ambassador. We called them an ambassador. You became an ambassador for us. By the end we had almost 1200 ambassadors around the world with 25 paid community marketers. But early days, didn’t have that.

So you’re an ambassador, say for Vietnam or wherever…

DG: Boston.

Steve: Yeah, Boston. No, we had them for North America and then we got them different regions, so it would be, who are the influencers in that market? Guy Kawasaki was one early on, he was an influencer. We would start to build a relationship with them. It was the whole story that you had to be kinda what I called higher, it had to be a holistic story. That was the age … I won’t go through all the other ones. So we’d build this relationship, and then they would then start sharing. The first would be get the relationship. The second we called Hootups. You’d bring people into a little bar/venue. We had no money initially. We literally would send stickers. Sounds really cheesy, but we had these little Hootsuite stickers we’d mail out.

DG: I’m getting a flashback, this is amazing, yes.

Steve: People loved it. Later on when we had money to start funding it, we would send swag and beer money, or drink money. We’d go, “You’ve gotta do a Hootup. You gotta do it once a month to be an ambassador. And then you also have to post socially about this.” So the swag would be an owl mask or something like this. So then we had this whole social channel-

DG: Was there any ask? Was there like, you have to sign up X people? Or was your expectation like if we can make these people love us, and they have these community events, by osmosis people are gonna sign up for our product?

Steve: Yeah.

DG: And that’s what you saw.

Steve: Absolutely was. We toyed around a little bit with trying to get some sort of an ask. Most of these people are volunteers, so the biggest thing was just simply getting the brand out. Because we knew if we could get the free brand going, we would convert X percent of them to our pro-

DG: It wasn’t like every influencer had some magic affiliate link, and you’d track it all down. It was just, hire people in these segments, go. That’s amazing.

Steve: And also they became our amplification. We had the Hootsuite Twitter. We called it our Death Star. It became pretty powerful. We wanted to blast the message out. The ambassadors would actually send out that message.

DG: And those are the days on Twitter where there was a couple accounts. Not everybody was on Twitter yet. If you were on Twitter, you’re already kinda the 1% of marketing nerd people.

Steve: And inside of that, the people that are like-

DG: Connected to Hootsuite and using social media tools. That’s like a whole different sphere.

Steve: Oh yeah. And it went on steroids. I really think the community program, because we didn’t have the budget … We used to write on a small whiteboard where the Hootups were. During the week you’d see them. By the end we had a whole cafeteria that would be 100 feet of whiteboard, where all around the world these Hootups were going. It’d be multiple a day, all over the place, so that was pretty exciting.

DG: That’s amazing. Do you think that not having the budget for stat solution-

Steve: Absolutely. Absolutely forced it. It became less critical later on as we started getting a budget, and we started spending more and more money on the paid user. Because for every paid user pro that we would get, we’d drag six free along. And then those six free, besides [crosstalk 00:10:33]

DG: From the same company?

Steve: From the same spend.

DG: Oh, just from a cost perspective.

Steve: Yeah. So not everyone would sign up for a trial, but those that didn’t would sign up for free, and we knew we would monetize a certain percentage of those free. Then that also had a chain effect too, that those free people would pull in some enterprises.

DG: I’ve been to South by Southwest twice.

Steve: Did you see the owl?

DG: One time I was there, there was an owl, a big bus-

Steve: Outside, man.

DG: A big bus that was an owl. Everybody was talking about it, getting pictures with it, tweeting, and that was pretty early in that.

Steve: It was really early.

DG: That was 2011.

Steve:  It’s one of our biggest marketing spend. When we finally squeezed the money to get it-

DG:  How much did the bus cost?

Steve: I’m trying to remember the exact number, it was not as much as you think. We had it configured and built in Austin.

DG: But you’re probably still under a million in ARR at that point. If you had just joined 300,000-

Steve: Yeah. When we did the bus we were probably around a million a year.

DG: The bus was great.

Steve: Lemme think about it. I can’t think of the numbers, but it was a really fast ramp. This is basically hacking South by Southwest. What are you gonna do, how do you get attention? You get a booth, everybody has a booth. If you do food, everybody has food. You throw a party, everybody throws a party. So the bus, with this owl … We got on USA Today, Wall Street Journal-

DG:            It was amazing. It was everywhere.

Steve:               The Today show. Everybody picked that thing and that was a home run.

DG:               Was any of that stuff inspired by the Constant Contact field education playbook? Or was it separate?

Steve:               A little bit. The ambassadors was a little bit by that, but I also saw what I saw happen at the ambassador program when they tried monetizing it. I’d left by that point. That to me didn’t seem like it worked super good. This was all marketing and PR.

DG: It’s free, it’s gotta be free.

Steve: You try to hold ’em accountable, they’re not gonna do it.

DG: We should buy your beer and pizza and let you do it, and the faith is the brand.

Steve: That’s exactly right.

DG: We’ve thought about freemium that way here. Freemium is our number one marketing thing that we have. There’s a million lessons from that. The Constant Contact E-mail had the viral footer. MailChimp, “sent by MailChimp”. There’s always some element of that.

Alright, so that’s Hootsuite, there’s one free lesson. This is why I love doing this podcast. Then from Hootsuite we go to Vidyard.

Steve: Yeah, and before I can jump into the Vidyard thing, we also knew we had to move into the enterprise.

DG: Oh yeah, that’s important.

Steve: When we started monetizing, it was 100% pro. And so, okay, we’ve gotta get this to an enterprise. We’d start out with five reps, just dialing for dollars-

DG: Hunting.

Steve: Hunting.

DG: No-clue hunting.

Steve: No leads, because we had no marketing, except for the community marketing. As we started building, marketing never drove more than 30% of our leads, though. I had BDRs that drove 25-30%, marketing drove 25-30, and the reps were required to do it. But by the end of five years, 70% of our revenue was enterprise. So we completely crossed that mark, and I segmented going from everybody doing everything, then I segmented at year two what we called corp and strat. So corp was inside sales and strat were field. And then the third year we segmented even further. So under corp we had SME, mid-market, large enterprise, and then we had strat.

DG: Was there one marketing team that fed those different segments?

Steve: No. Somewhat, and it’s changed since I left. But I talked to a bunch of different people about this for InVision, and Zendesk, Survey Monkey and a bunch of these guys. I felt we had to have a business owner of enterprise, and a business owner of the free pro product. So I had a VP basically of that online business. He was the first employee in that team. He built it up to a global team of 50. He’s now CRO at Bench. Great, phenomenal guy. Craig Ryomoto.

And then the enterprise had an enterprise leader that did that. So marketing owned overall brand, overall PR and all that stuff, but the online team did their own paid user. They managed our webpage, you’ve seen those, they could do their own testing, but that needs to have control.

DG: So marketing was entirely focused on brand.

Steve: Yeah, brand, and then they also did the enterprise. As we moved into the enterprise, we got a great woman from Yammer. She came on, and she’s now at Movable Ink, if you know those guys. Her whole job was just to move this from a freemium brand to an enterprise, and that’s when cutesy owl moved to the faded-out black-and-white owl, if you remember that. Then enterprise became analyst relations, pitch decks, demos-

DG: Dinners, smaller stuff.

Steve: Dinners, events. Since I left, they’ve combined the marketing for both of them, which I didn’t like. But it’s up to them how they wanna do it.

DG: Yeah. Of course. It’s interesting, there’s more companies that have that model now, which is ten years ago, even five years ago you’d say, “If you’re gonna sell to the enterprise … You’re either free or enterprise.” Now there’s so many businesses that combine them.

I think of myself as a marketer. I’m probably not gonna buy a product that I haven’t tried.

Steve: That’s exactly right. Old PQL is gonna drive everything. Had a really fascinating story. This is Dave Goldberg, he’s passed away. Love that guy. He was the CEO of SurveyMonkey. He called and wanted to come up to Hootsuite. At that point, just shows you the timing, how so much has changed. There were very few freemium-to-enterprise success stories. He heard about what we were doing, we were partners, could he spend a day?

DG: Kidding me?

Steve: This is amazing. So he came up, spent a day with him, and like I said, an amazing guy as a sidebar. And when he passed away tragically, it impacted me way more than I thought. ‘Cause I really only spent eight hours with this guy and one other meeting. And he would answer E-mails and stuff, but he was such a nice guy. Just such a nice guy.

But he opened the kimono on everything on free and pro. And I’m like, “Do that, and I’ll tell you everything on enterprise, what we did.” And they ended up doing it, they’re big into enterprise now.

DG: In the free and pro thing, from the SurveyMonkey set, what’s one thing that you learned from that playbook?

Steve: From the pro playbook from Dave, what I learned was, we were not doing annual pre-pays for pro. It was just month-to-month, ’cause that was the gameplan.

DG: It was a low price point.

Steve: Yeah, we started at $5.99 a month, and so you ask why $5.99, it’s just what they decided. We moved it to 15. The thesis was everybody that’s paying month-to-month, you’ll have less churn.

DG: If they go annual. And there’s high churn in the small business segment.

Steve: Right. And people aren’t gonna do it. So he’s like, “Absolutely not true.” He told me his numbers, how many, I’m like, “Are you kidding me?” So we immediately flipped and started doing annual. He’s like, “You have to offer a discount.” If I remember off the top of my head, it was around 20% discount to do the annual. And way more than half of our business on the pro came from annual.

DG: Is there something that happens mentally there? Is that just a perception thing? People perceive that they’re getting the same product for less?

Steve: Yeah.

DG: Instead of $5.99, it’s $3.99.

Steve: Yeah, and you know what the churn was? Cut our churn in half.

DG: Wow. Just by a pricing change. [crosstalk 00:16:43]

Steve: Plus you get all our advertising spend for the next month.

DG: Was it paid annually?

Steve: Yeah.

DG: Not monthly billing?

Steve: No.

DG: And people just mentally said, “This looks cheaper. I’m gonna-”

Steve: You don’t have any choice, right? You go, “You wanna do this or not?” So that was-

DG: Amazing.

Steve: …by far the biggest takeaway I got from him. The other one was actually Dave’s suggestion. We were doing all of our paid user spend-

DG: I’m writing notes, I’m writing notes.

Steve: So Dave was like, “You know what you should do, you really should look at an agency for this.” I’m like, “No, our guys are great.” He’s like, “No, no.” Our spend was about the same as theirs for the paid user, but I used the same agency that he did. It actually was a huge win for us. I think we did it for six months or so. Pulled everything out of it. And I’m actually going through the same process right now at our current company. We’re just outsourcing to an agency just to get the knowledge.

DG: Let’s maybe get two or three minutes before we wrap up on the last part of your journey, and then what you’re doing today.

Steve: Hootsuite was a phenomenal run. Some of the lessons there … culture, eat strategy for breakfast as they say. I think Ben Chestnut said that when he was interviewed about Constant Contact. So that was a huge one. Really having a model that lines up. Having a purpose that matters I think really makes a difference. To me that was always super important at Hootsuite, that everybody knew what they were doing was meaningful.

Our purpose statement became: We help transform messages into meaningful relationships. What that really meant to us was, it manages social. We weren’t social, we were just managing social. If you could see them, social messages going out, just this cacophony of noise. What do we want customers out of this? We want them to be able to basically pull on that noise, manage it, and start having a relationship with you, David, right?

DG: ‘Cause it became more of a sales channel, more of a support channel, right?

Steve: Yeah, and we got to know that person. So that became really big for me, and I think it was a really good win. Also the second learning I got from Constant Contact was move international faster. It was not late, but it was a slow move. I watched this, I’m like, “Y’know what? Sometimes you just gotta move.” So we made the decision … I joined in 2011, we went to EMEA 2012 with just a small office. Fast forward three years later, we had 160 people there, 10 in Paris, 5 in Hamburg, and we had a global support center firmly in Bucharest, and 35% of our revenue coming from EMEA.

DG: That’s amazing.

Steve: And then same thing with APAC, we had a Singapore headquarters.

DG: You probably had to make that decision without a ton of data, you just felt you had to go-

Steve: No, we had to go. My rule of thumb was, am I getting, what’s the percentage of free signups? Or it could be revenue. A lot of companies would say, “Pick a number,” right? I always looked at it like, if I was getting 10% of my signups from a market …

DG: It’s time to go.

Steve: It’s time to go. And that’s free. You can also do it from an ARR perspective. Some people say a million. We did it a little bit less than a million when we went in. It was such a game-changer that we did that, and it put us so far ahead of the competition for a while for that.

DG: Do you have any Vidyard lessons?

Steve: Yeah, I do. That was actually a really interesting, great company. Great space. I spent five years commuting from Maine to Vancouver, so that was-

DG: You did it five years?

Steve: Five years, man. Like, I can’t keep doing this-

DG: Commuting from Maine to Vancouver.

Steve: Not close, man.

DG: Those two things are not close. How brutal.

Steve: And it was never supposed to be that long, it was supposed to be faster, and it still hasn’t sold. Then Vidyard, I actually got to know these guys … The same investor that led around Hootsuite led around Vidyard. He was at OMERS, and then ironically the rule I have right now … He took this role as Chief Commercial Officer at Intelex, and then tragically passed away. So I’m just temporarily helping the company out.

But Vidyard lessons were … We were selling a sort of a niche within a niche, with a video for marketing. Great, great product. But as we kinda looked at this, how do we break this open? We were an enterprise product-

DG: Then you go from the other end.

Steve: Right, from the other end.

DG: Okay, we’re already doing the enterprise thing, Steve Johnson’s coming in with the freemium.

Steve: That’s it. They weren’t too happy about it, I don’t wanna say the board loved that initially, but to me it was a no-brainer. We had to come up with something that other people could use, and actually use it really easily. We had a failed start at it initially. We tried doing it on our original platform. I think the first name of the product was Engage. It was built on our enterprise platform, it just bombed. So kudos to the founders and the board, they let us go do again another try, and that was GoVideo. And that was a huge, huge success.

DG: Huge.

Steve: So that’s been really good. Lotta companies, I think you guys are integrating, using it.

DG: Use it five, ten times a day. At least.

Steve: I love it. So that went from just a trial of free to no, let’s add enterprise I think it was three months later we had enterprise. And I can’t say the numbers, but it became a really big piece of the enterprise business for Vidyard. After two years there I’m like, “My mission is done, you guys are doing great. We have a great team, they’re off and running.” Yeah, that’s probably the big lesson there. Not that the freemium works everywhere. Just talking to another executive in Boston here earlier this morning … Freemium to me is, if you have a vertical, if you’re a niche, it doesn’t make any sense, right? You’ve got a limited market. But if you have a wide, horizontal market, the freemium is a phenomenal way to get customers.

DG: And if you think about where we are with software today, I can find anything out without talking to sales reps, or nobody has to turn anything on in my account, or give me a license or something anymore. And so, I think just where the world is going, people wanna try before they buy. And people are gonna win on their product experiences. So if you can get people into your product, and then they talk to sales, which is such a different change from 10-20 years ago, which is talk to sales, then buy, then get you in the product. Now it’s give you the product, then talk to sales, and then buy.

Steve: 100%. Probably another story I would say too is, any company that really goes big … a founder with sort of what I call a reality distortion zone, I brought Ryan to meet Gail at Constant Contact. And you could tell, there were like 20 people, and Ryan thought they were much bigger and better than … Publicly traded company, right? He just had this head about him like, “We’re gonna be really big.” We all had that same attitude, like why play small ball?

DG: I think in order to lead a company you have to have that mentality. You’re not in this to build something small. You think your thing’s gonna change the world and-

Steve: That’s exactly right.

DG: This is great.

Steve: Awesome.

DG: We did 30 minutes, we could’ve gone forever.

Steve: Man, this is awesome, thank you.

DG: Appreciate it.

Steve: Great being here.

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