Founder’s Corner: Inside the Mind of a Technical Founder
September 3, 2014
In this week’s edition of the Founder’s Corner, Larry Kim, founder and CTO of WordStream — one of the nation’s largest PPC management software solutions — shares his thoughts on what it means to be a technical founder, his tips for working with one, his philosophies on recruiting and product development, and more.
This Week in the Founder’s Corner
“It’s easy, especially in the tech space, to go off on tangents and change really quickly as you grow, but you have to always, always remember your purpose. You can really dilute your brand trying to be everything to everyone, and it saps your strength.”
— Larry Kim, Founder and CTO at WordStream
What inspired you to start WordStream?
I was inspired in the way so many entrepreneurs are – I needed a better solution for a problem. Earlier in my career, I was doing paid search consulting work and growing frustrated with the lack of tools to automate repetitive tasks like keyword expansion and grouping. It didn’t take me long to figure out that if I could free up the time I spent doing so much of this work manually, I could take on more clients and make more money.
My “Aha!” moment came when I realized a lot of companies were struggling with these menial tasks and there really wasn’t a great solution out there yet. With a simple UX, I knew such a tool could have really broad appeal and help a lot of people solve this problem. And make more money! Because that’s what it’s really all about in B2B, isn’t it?
For people who aren’t familiar with WordStream, tell us a little about the company?
I founded WordStream as a keyword software tool development firm in 2007 and we’ve since grown into one of the nation’s largest PPC management software solutions and a popular resource for search marketers with our thought leadership and educational initiatives. WordStream is also a source of important insights for the PPC industry — we perform a lot of research on billions of dollars of ad spend we have to analyze.
WordStream publishes a popular PPC blog and The 20-Minute PPC Work Week system for AdWords marketers. We also offer free tools like AdWords Grader Plus and AdWords Landing Page Grader to help marketers analyze and optimize their AdWords accounts. Most recently, we launched our new PPC University, a completely free and comprehensive training ground for marketers of all experience levels.
As I said, our mission is to bring the power of search marketing to businesses of all sizes and we believe this is accomplished through the provision of the best tools, but also free resources, education and thought leadership.
What’s the most important thing in building a strong company?
If you want to succeed and grow, you have to know what it is you stand for and how you’re going to demonstrate that to investors, employees, and customers. Our core values aren’t just some set of ideals; they really drive how we behave and the decisions we make. That’s critical if you have any plans to grow without falling apart — because that can absolutely happen, if you lack a set of guiding principles. It gives you something to refer back to, a set of standards to weigh your options against.
In addition, you have to understand your purpose. WordStream’s is simply defined as “Bringing the power of search marketing to businesses of all sizes.” It’s easy, especially in the tech space, to go off on tangents and change really quickly as you grow, but you have to always, always remember your purpose. If you’re heading out into different territory, really think about whether it’s a good direction for your company as a whole, or if it should maybe be part of another effort. You can really dilute your brand trying to be everything to everyone and it saps your strength.
“Apply the toothbrush test to any new product or feature you’re working on: is it something you’ll use every day and does it make your life better? If not, forget about it.”
Do you think in order for a startup to succeed that you need to have a technical co-founder?
If it’s a software startup, yes, you’re generally looking for at least one founder with a background in engineering or computer science. That foundational knowledge is going to help drive the direction of your company and your innovations, so I think it’s important.
My own background was in electrical engineering and four of my first five hires were software engineers. With that said, you have to realize, too, that the best person to found a startup may not be the best person to lead it through massive growth. Ralph Folz became WordStream’s CEO in 2010 and I became CTO. That was the best decision the company has ever made. He came to us with a massive amount of experience in business development and management, and he’s essentially doubled the business every year for the last three years.
“Depending on the stage you’re at, you’re going to be looking for different types of leadership. Stay flexible and open to that.”
What advice would you give to someone seeking a technical founder?
Find a technical co-founder. Just do it! That’s it. That’s what entrepreneurship is about. You need to find things and make stuff out of nothing. If you’re complaining about this, you’ll have no hope in doing all the other (much harder) things.
One challenge you may run into is that sometimes technical people are afraid of risks. Any engineer worth hiring probably has a job already and it’s hard to get people to quit their day jobs to jump on your idea. Do things that will make them feel more comfortable. Hire more people or contractors to build a prototype so that they don’t feel like it’s a one-man operation and the onus for the entire company’s success is on them. Be open and honest with them and respect the confidence they’re putting in you. As you grow, it’s going to be that much easier to convince people to stay with you or take a leap of faith and join the company.
What advice do you have for venture capitalists working with a technical founder?
There seem to be two models, really. West coast VCs try to keep the technical founder in the CEO role and build around them (hiring operational folks to make any weaknesses go away, eg.: Facebook). East coast VCs tend to bring in operationally-focused CEOs and have founders contribute in other ways.
I think there’s greater risk and reward with the west coast model. Since the goal is to make tons of money, why not go for broke and use the west coast model?
You are very active as a thought leader in the search marketing community what advice would you give other technical founders on how to speak out/up more?
Just do it. Get out there and into the community! You don’t need a PR firm to help you comment on influencer blog posts or interact with other professionals on Twitter. I think the whole concept of thought leadership has been blown up into this big thing that people think is really difficult to manage. It is very possible to go so far in the direction of managing your presence that you become this caricature, a fake personality that might be influential in some circles but is still someone no one really knows. Just get out there into the industry you love and be yourself. Talk, blog and discuss in social media the things you care about or find inspiring. Tell people when you think they’re doing cool work. Becoming “that guy who’s super involved” carries more weight than “that guy who gets mentioned in media a lot” when you get right down to it.
How have you defined the culture at WordStream?
We’ve focused heavily on authenticity, transparency, and providing the best customer experience possible. At WordStream, this means investing in our team members so they’re empowered to take calculated risks, be creative and feel comfortable bringing their ideas and feedback forward. That’s really important in software and tech in general — you spend all of this time looking for the best talent and it makes no sense if you don’t get the most from them.
What’s your recruiting philosophy?
I ask situational questions as opposed to dumb brain teasers. For example, I’ll ask questions like, “Tell me a story where you went above and beyond what was asked of you.” I can see different qualities based on the answers. Of course you want to know about their depth of knowledge and experience, but we really want to know how they’ll react to and handle different types of situations.
“The worst people I’ve ever worked with are folks who are defensive and/or insecure, so I try to avoid those types of people.”
Can you talk about building out your initial founding team? What were the first roles you brought on? How did you assess for fit?
When I got my first $4M Series A in August of 2008, WordStream consisted of myself and four other people. Three were software engineers and one was a sales/marketing manager. We needed to build product, so that was where I invested the most. The three engineers I hired were all colleagues of one another already (one ended up referring another, who referred the other), so I was sure they would be a great fit.
We needed one sales and marketing pro to sell the software we were building. Initially, that was me, but soon there was the need for all sorts of marketing materials and demos, a website, etc., so I brought in a sales and marketing person.
What tips do you have for technical founders looking to bring on their first sales/marketing leader?
Well, early on, it’s not like you can be super picky. Usually the bigger challenge is selling them on your vision and getting them to join you, as opposed to picking the strongest candidate. For example, the first sales and marketing hire had little formal training in sales/marketing (he was actually a bar tender in a previous job!). But I knew he was going to be a great fit because he wasn’t representing himself as a sales and marketing pro, but rather a really nice person with a huge appetite to learn more about online marketing.
If you do find candidates that claim to be sales/marketing pros, there are ways to validate this. For example, do they have social profiles with engagement, an active blog, etc.? To verify sales experience you’re definitely going to want to see results-based performance in past positions.
What’s your product philosophy?
- Don’t assume that new features will always improve things (often things get worse!). Mitigate that risk by using data to guide decisions.
- Apply the toothbrush test to any new product or feature you’re working on: is it something you’ll use every day and does it make your life better? If not, forget about it.
You just landed a new round of funding — what would your advice be to others about how to secure more funding?
Yes, we just raised $9M in Series C and $3M in venture debt to help fund our expansion. At this point, when you’re after funding for expansion as opposed to your initial start-up funding, you really have to be able to show results to get buy-in for your future plans. If investors aren’t interested in your expansion plans, you really need to take a critical look at what you’re proposing and its feasibility.
What’s on your roadmap?
In the age of “inbound” popularized by companies like HubSpot, where does paid fit in?
Within any segment, there are certain types of keywords that do better for SEO and some that do better for PPC. For example, keywords with commercial intent (people looking to buy) do better on paid search because Google crowds out all the above-the-fold space with ads, such as Google Shopping ads. Keywords with informational intent (e.g. “who won the battle of 1812”) do much better in SEO since Google doesn’t even bother showing ads for most informational queries. By using both together, you can have better coverage across all the keywords within your niche.
The conversion rates from a typical SEO content piece are low single digits (around 3%). By tagging those visitors and remarketing to them on the Google Display Network, you could double that conversion rate.
If you invest time and money into creating content, then you should be using paid social promotion options on Twitter, Facebook and Linkedin to make sure your content gets the attention it deserves.
How is paid marketing effective for B2B?
B2B tends to have a far longer sales cycle. You might have a committee of people making the decision, or one person having to prove the value of any potential solution to a larger group. Their informational needs are usually far greater than in B2C. Paid search marketing helps you get in front of those people with the right information, at the right time. It’s not just for discovery, though. With the newer custom audience tools on different ad platforms and the power of remarketing, you can reach people at different points in the decision making process (or even post-sale) with targeted messaging to help move them to the next stage in the process.
Simply, there’s no guarantee you’re going to reach them with organic search. You’ll get some, but nowhere near all. Paid and organic work best when they complement one another.
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