Some Heart-felt and Humble Advice For Rand Fishkin of SEOmoz

About This Blog

This site is for  entrepreneurs.  A full RSS feed to the articles is available.  Please subscribe so we know you're out there.  If you need more convincing, learn more about the site.

Community

Google+

And, you can find me on Google+

Connect on Twitter

Get Articles By Email

Your email:

Google

Blog Navigator

Navigate By : 
[Article Index]

Questions about startups?

If you have questions about startups, you can find me and a bunch of other startup fanatics on the free Q&A website:

Answers.OnStartups.com

Subscribe to Updates

 

30,000+ subscribers can't all be wrong.  Subscribe to the OnStartups.com RSS feed.

Follow me on LinkedIn

OnStartups

Current Articles | RSS Feed RSS Feed

Some Heart-felt and Humble Advice For Rand Fishkin of SEOmoz

 

Dear Rand,

Really enjoyed the recent article on your personal blog, “Inflection Points: Bravery vs. Foolishness”. Very few entrepreneurs have the courage to be that transparent. On behalf of entrepreneurs everywhere, thank you!

We've known each other for many years now and have had many a late-night conversation, and many dinners. I'm honored to call you a friend.

Though our direct chats are always fun and useful, I thought it might be interesting to have a longer, “in written form” response to your article. I was inspired to write this article a bit by Brian Halligan, my co-founder at HubSpot (who you also know), who left an exceptionally detailed comment on your article. I'll be borrowing liberally from Brian's comment (it won't be the first time I've borrowed from Brian's wisdom and used it to make me look smarter than I actually am).rand fishkin

1. It's great to have options. Raising capital is always a bit of a scary thing for an entrepreneur. And, for right reason. It not only changes a lot about the business, it also changes you. SEOmoz is now at the stage where outside capital is not a “necessity”. That's awesome. It takes away one of my biggest concerns with raising capital: When the entrepreneur doesn't have a choice, she doesn't have any leverage. Having the option to raise capital is a big amount of leverage and dramatically increases the odds of both getting a fair deal and making a rational, thoughtful decision.

2. If you're going to raise, raise now. If you're thinking about raising capital, this is a really good time to do it. The markets are nice and frothy, making for a great time to be a seller of equity. The timing question is always hard (both in terms of M&A, which is selling all of your equity or a funding round, which is part of your equity). I've been through this particular calculus before. When things are going really well (as they are for SEOmoz), it's tempting to think: “Hey, the market is valuing us at X times revenue — our revenue is going to go up by Y, so our valuation will be going up by X*Y in the next year.” I've made exactly that argument to myself in the past (not at HubSpot, but my former company). As it turns out, up markets go down and frothy markets get less frothy. So, if the market took a downturn, it could have two potential impacts on your company valuation: 1) your revenue multiple goes down (thereby decreasing valuation). 2) Your actual revenue could be lower than you expected — because people are not buying as readily or cancelling more often. So, it's entirely possible that despite having a “good” year coming up, the company is valued less. So, our advice would be: If you're considering raising at all, don't try to wait until you drive your revenue up further. Raise now.

3. Take some freakin' money off the table! I recognize that you have concerns. And that you lead a modest and happy lifestyle. And that you don't want money to mess things up. I get all that. But, it's not only irrational to have such little diversification of your personal funds, it's outright irresponsible. In terms of how much you should take — that's a personal decision. If it were me (I don't have a particularly lavish life either), I'd shoot for several million. Enough to where you didn't have to worry (or think about) money at all for the next 10 years.

Bonus argument: Even if you kept your lifestyle exactly the same, here's one more phenomenal reason to take some cash off the table: You could become an angel investor and help other up-and-coming entrepreneurs get started. Trust me, you'd have a blast! Though this doesn't completely solve the “lack of diversification” problem (you'd still have your money tied up in startups), at least it's not all the same startup.

Oh, and by the way, I know you kids these days like living on the edge and all, but having just $25k in savings is unwise — especially if it's unnecessary.

It is not about the money. It's about having options.

Finally, as Brian said: Just because you have millions in the bank doesn't mean you have to stop working crazy, ungodly hours. My suspicion is that you have the startup gene that means you're going to work crazy hours regardless.  (Besides, who wants to work godly hours, anyways?)

4. VC will definitely change things. I'll just take Brian's words directly on this one: My personal sense of the thing that will be most uncomfortable for you is if a good quality VC joins your board is the scrutiny she will give your team and other board members. She will constantly be testing your conviction about team members and constantly looking to hire one of her crony outside overpriced headhunters to replace the folks that you rely on and who built your business with you. I have no idea whether you think your team is the right team that will scale or not, but if you do think they are the right team that will scale, be prepared to defend that position for a long time. VCs can never know your business that deeply and chapter 1 of their playbook where they think they can add the most value is on the “team.” It is low risk for them and their network is where they perceive their biggest value is. Sometimes they are right here and bring in just the right person, other times they don’t.


5. Its about the people. Also from Brian: Your hierarchy of investor priorities is right. I have gotten to know a lot of VCs over the last few years and many of them are not as good as I expected. There are some of the really top dogs that I’m convinced are far more lucky than good, so don’t be dazzled by their investment record. In my mind, there are two “types” of VCs, ones that are more like Wall Street equity analysts that are great with spreadsheets and picking trends and others that are former CEOs. Like you, I’m a first-time CEO, so part of my criteria was to find the ex-CEO type who I could turn to for advice and this turned out to be a really good decisions for me. When an equity analyst type or an ex-CEO type, I’ll give you my VC test: When I meet with them to talk about the business, do I take any notes or any action items? About 80% of the time when meeting VCs, I don’t take any notes or any action items — once in a awhile I meet someone that is sharp and changes my thinking or gives me great advice. Go with one of those ones, even if the terms are much worse.

6. Protect the culture. One thing Brian and I have learned in building HubSpot is that culture counts. Industries change, markets change and products change — but amidst it all, great cultures endure. You've built a great culture at SEOmoz and you should fight to defend it. But, raising a round of capital doesn't necessarily mean you'll screw your culture up. I like to believe we do a pretty good job at HubSpot when it comes to culture (many would argue that it's one of our biggest advantages). We've raised over $50 million across four rounds of capital and 6 investors and have managed to maintain the core of our culture. Brian notes: The act of raising money and having a new board member is not what will screw up your culture. It is when you bring in new team members that things can go awry. Every time you bring in a new exec, the exec team sort of needs to re-form itself and re-gel. If you bring in a crony of the VCs that doesn’t fit and who isn't TAGFEE, that’s where the culture blows up. [This last point is something I haven't personally experienced, but saw through other CEOs I know through a CEO group I joined]

We both are super-impressed with what you've done and that you've done it without being (or becoming) a jackass — quite the opposite. We look forward forward to watching your continued success.

Warm regards,

Brian Halligan and Dharmesh Shah (the HubSpot guys)

Posted by Dharmesh Shah on Thu, Jul 07, 2011

COMMENTS

wow I really love how transparent Rand is. I have learned so much from him.  
 
Good luck with your decision Rand!

posted on Thursday, July 07, 2011 at 6:48 PM by Rishi


Good One, there. I love SEOmoz. They offer some of the latest and the most detailed oriented articles on SEO.

posted on Thursday, July 07, 2011 at 10:12 PM by Eddie Gear


What a gift you've given, Dharmesh and Brian. Not only a gift to Rand, and perhaps some peace of mind, but a gift to all readers. 
Thank you, 
Lauren Gold

posted on Thursday, July 07, 2011 at 11:39 PM by Lauren Gold


Spot-on Dharmesh! I was lucky enough to have listened to Rand's interview over at Mixergy.com...where he was about as honest about the seomoz startup as anyone could be! Thinking on that and this post together is about as good as it gets! Kudos here....

posted on Friday, July 08, 2011 at 7:01 AM by Jim Rudnick


This is a great blog. Very usel information here.

posted on Saturday, July 09, 2011 at 9:28 AM by CooperJal


Even as someone who works part-time for Rand, I'd really like to echo (3). I don't think anyone at SEOmoz would begrudge him taking out some money for himself. 
 
Honestly, I worry about the opposite. I was the first employee and eventually VP for a start-up and never had a stake. I didn't ask for much other than occasional raises (usually pushing for equal raises for my staff). I thought I was being unselfish and doing it for the company, but eventually I resented it. By then, it was too late. After 8 years, I had started to hate the company I helped build. 
 
Obviously, Rand has a large stake and more investment in SEOmoz than I did in my former company, but I think the risk is still very real. He risks becoming a martyr in his own mind, and resenting his employees for buying homes, saving up money, etc. Rand's a great guy, and incredibly generous, but once you see that resentment forming, it may already be too late. 
 
I also think that it builds confidence. If Rand can say: "Hey, we've come a long way, and I know SEOmoz is stable enough that I can put my own house in order", that sends a message to employees and investors, IMO. I think there's a balance - it may not be millions, but taking out enough to secure his future is important.

posted on Monday, July 11, 2011 at 10:47 AM by Dr. Pete


Dr. Pete is right. There's a balance. I feel Rand should take out some $ for himself; though I see no reason why it has to be in the seven digits. I'm sure the decision he'll make will be right for him, and his family (moz and wife)

posted on Wednesday, July 13, 2011 at 11:06 AM by Glenn Friesen


I hate it when people ruin blog comments by spamming. Is is that hard to post a comment without putting 10 links in them? Just use your name as a link, don't be greedy.

posted on Thursday, July 14, 2011 at 3:55 PM by @ryanbradley



After a week filled Nike Air Max on Sale 
with rumor and Nike Air Max 1 
intrigue, the Cheap Nike Air Max 
official New China Nike Air Max Classic 
News Agency hadNike Air Max TN 
the following message nike air max running shoes 
Thursday to relay cheap nike air max 2009 
to the world: Nike Air Max 2010 
Former President Air Max Outlet 
Jiang Zemin nike air max 2009 authentic 
is not dead.nike air max 2009 blue 
fuck american nike air max 2009 black

posted on Monday, July 18, 2011 at 11:00 PM by air max schuhe günstig kaufen


it's always surprising when I find the above link spammers hitting on a site with their b******t links! 
 
 
 
only way around it I've ever found is to moderate these idiots out of existance.... 
 
 
 
...sigh... 
 
 
 
Jim 
 
 
 
PS I make it a rule to NEVER EVER buy any product I see being spammed by these idiots too, eh!

posted on Tuesday, July 19, 2011 at 8:16 AM by Jim Rudnick


I watched  
 
louboutin sale a film . The main louboutin shoes story was about a wedding christian louboutin Shoes battle between two girl , they louboutin Shoes 
 
christian sandals are good friends too. Why louboutin pumps two good friends would louboutin sandals fight for a wedding? Some christian louboutin daffodil shoes people may say it’s Christian Louboutin Lace up Pumps because of the bridegroom .If you Christian Louboutin Classic Pumps Apricot think so, I can tell you red peep toe shoes that you are definitely wrong .The true reason Pointed toe Shoes is the designer of the wedding dresses .Who is Round toe Shoes a pretty famous designer cheap flats shoes and there is only one red flats shoes people can get the wedding dresses ,so there is the battle. Why do people care about the wedding dresses .Because everyone hope it will be unique .So cheap wedding dresses .Be here you can get the unique and cheap wedding dresses. Like the actresses in the movies .If you have the bridesmaid , of course, you can choose the dresses for her here Evening Dresses. It’s very convenient for you to do such dresses stuff. As we know, preparing for a wedding is very boring. You have to arrange properly . So if you come here we can help you solve the big deal. In my opinion, every girl dreams to have a incredible and romantic wedding .When your lover taking walk through the red carpet .You will the most lucky and happy lady in the world. 
 

posted on Friday, July 22, 2011 at 8:07 PM by zxc


I watched  
 
louboutin sale a film . The main louboutin shoes story was about a wedding christian louboutin Shoes battle between two girl , they louboutin Shoes 
 
christian sandals are good friends too. Why louboutin pumps two good friends would louboutin sandals fight for a wedding? Some christian louboutin daffodil shoes people may say it’s Christian Louboutin Lace up Pumps because of the bridegroom .If you Christian Louboutin Classic Pumps Apricot think so, I can tell you red peep toe shoes that you are definitely wrong .The true reason Pointed toe Shoes is the designer of the wedding dresses .Who is Round toe Shoes a pretty famous designer cheap flats shoes and there is only one red flats shoes people can get the wedding dresses ,so there is the battle. Why do people care about the wedding dresses .Because everyone hope it will be unique .So cheap wedding dresses .Be here you can get the unique and cheap wedding dresses. Like the actresses in the movies .If you have the bridesmaid , of course, you can choose the dresses for her here Evening Dresses. It’s very convenient for you to do such dresses stuff. As we know, preparing for a wedding is very boring. You have to arrange properly . So if you come here we can help you solve the big deal. In my opinion, every girl dreams to have a incredible and romantic wedding .When your lover taking walk through the red carpet .You will the most lucky and happy lady in the world. 
 

posted on Friday, July 22, 2011 at 8:13 PM by zxc


I watched  
 
louboutin sale a film . The main louboutin shoes story was about a wedding christian louboutin Shoes battle between two girl , they louboutin Shoes 
 
christian sandals are good friends too. Why louboutin pumps two good friends would louboutin sandals fight for a wedding? Some christian louboutin daffodil shoes people may say it’s Christian Louboutin Lace up Pumps because of the bridegroom .If you Christian Louboutin Classic Pumps Apricot think so, I can tell you red peep toe shoes that you are definitely wrong .The true reason Pointed toe Shoes is the designer of the wedding dresses .Who is Round toe Shoes a pretty famous designer cheap flats shoes and there is only one red flats shoes people can get the wedding dresses ,so there is the battle. Why do people care about the wedding dresses .Because everyone hope it will be unique .So cheap wedding dresses .Be here you can get the unique and cheap wedding dresses. Like the actresses in the movies .If you have the bridesmaid , of course, you can choose the dresses for her here Evening Dresses. It’s very convenient for you to do such dresses stuff. As we know, preparing for a wedding is very boring. You have to arrange properly . So if you come here we can help you solve the big deal. In my opinion, every girl dreams to have a incredible and romantic wedding .When your lover taking walk through the red carpet .You will the most lucky and happy lady in the world. 
 

posted on Friday, July 22, 2011 at 8:14 PM by zxc


jordan fusion eights 
Nike Shox R5 Men 
jordan fusion id 4683 
air jordan fusion force 5 
cheap jordan sneakers 
jordan fusion for sale 
jordan fusion blazers 
Air Jordan Fusion 6 
jordan fusion dates 
Air Jordan Fusion 9 
Air Jordan Fusion 4 
jordan fusion 6 
jordan fusion colors 
Nike Shox R5 Women 
jordan fusion for kids 
jordan fusion heels 
jordan fusion boots 
jordan fusion 
jordan fusion cp3 
Nike Shox Sparq P9 
jordan fusion green 
air jordan fusion history 
jordan fusion gear 
air jordan fusion for kids 
air jordan fusion high top 
Jordan Fusion 5 
jordan fusion cleats 
jordan fusion images

posted on Saturday, July 23, 2011 at 2:27 AM by Cheap jordan sneakers


I watched  
 
louboutin sale a film . The main louboutin shoes story was about a wedding christian louboutin Shoes battle between two girl , they louboutin Shoes 
 
christian sandals are good friends too. Why louboutin pumps two good friends would louboutin sandals fight for a wedding? Some christian louboutin daffodil shoes people may say it’s Christian Louboutin Lace up Pumps because of the bridegroom .If you Christian Louboutin Classic Pumps Apricot think so, I can tell you red peep toe shoes that you are definitely wrong .The true reason Pointed toe Shoes is the designer of the wedding dresses .Who is Round toe Shoes a pretty famous designer cheap flats shoes and there is only one red flats shoes people can get the wedding dresses ,so there is the battle. Why do people care about the wedding dresses .Because everyone hope it will be unique .So cheap wedding dresses .Be here you can get the unique and cheap wedding dresses. Like the actresses in the movies .If you have the bridesmaid , of course, you can choose the dresses for her here Evening Dresses. It’s very convenient for you to do such dresses stuff. As we know, preparing for a wedding is very boring. You have to arrange properly . So if you come here we can help you solve the big deal. In my opinion, every girl dreams to have a incredible and romantic wedding .When your lover taking walk through the red carpet .You will the most lucky and happy lady in the world. 
 

posted on Tuesday, July 26, 2011 at 3:22 AM by zxc


In 1999, Michael Jordan was named the most significant authentic womens jordan retros 7 athlete using the twentieth century with the ESPN <div style="clear:both;"><img class="aligncenter size-full wp-image-179" title="Nike Air Jordan 7 White French Blue Flint Greyblack" src="http://jordanshoesstores.files.wordpress.com/2011/07/nike-air-jordan-7-white-french-blue-flint-greyblack.jpg" alt="authentic womens jordan retros 7" width="228" height="228"/><span style=" float:left;">real jordan shoes sale</span>sports network.He was detailed as getting 2nd only to Babe Ruth within the Associated Press' observe record using the very best athletes using the 20th century. His leaping ability may be vividly real air jordans verified by his feats of dunking a basketball away from your foul line, earning him nicknames like ticket Jordan.As a <a href= "http://www.buyrealairjordans.com/">real jordan outlet youthful child in school, Jordan was impressive athlete that arrived to know-how in three sports at once, and sooner or later on singled this straight right down to basketball but needed to endure a number Air Jordans 11 Retro 2011 of seasons of getting refused away from your varsity basketball team. Jordan then earned an athletic grant in path of higher education of North Carolina. <div style="clear:both;"><img class="aligncenter size-full wp-image-176" title="Air Jordan 3 Retro White Fire Red" src="http://jordanshoesstores.files.wordpress.com/2011/07/air-jordan-3-retro-white-fire-red.jpg" alt="Air Jordan 3 Retro White Fire Red " width="228" height="228"/><span style=" float:left;">jordan for cheap</span></div>While there, became a excellent participant much more compared to time invested working using the Air Jordans 7 Retro for sale team-oriented system. After successful a participant using the 12 calendar months award in 1984, he left to subscribe for the Air Jordans 9 Retro 2011 NBA Draft, and was chosen with the Chicago Bulls within the relatively first round since the 3rd select overall. Jordan performed thirteen seasons using the Bulls and two authentic jordan retro 9 using the Washington Wizards. He was generally utilized being a shooting guard, and was just as versatile a risk at cheap jordan shoes 13 stage guard and small forward.<div style="clear:both;"><img class="aligncenter size-full wp-image-172" title="Air Jordan 3 Re-Retro White True Blue" src="http://jordanshoesstores.files.wordpress.com/2011/07/air-jordan-3-re-retro-white-true-blue1.jpg" alt="real jordan shoes sale" width="228" height="228"/><span style=" float:left;">Real Air Jordans</span></div>Throughout his career, Michael Jordan, a gifted, has proved himself worthy of all the acceptance and praise Cheap air jordans 11garnered through his capabilities and talents, and has considering lent his useful training to coaching. zjw

posted on Tuesday, August 02, 2011 at 3:09 AM by real air jordans


Is there any approach you possibly can take away me from that service? Thanks!

posted on Thursday, August 11, 2011 at 4:21 AM by North Face Sale


People built some advantageous particulars generally there. I did so a glance regarding within the topic as well as viewed the majority of persons will certainly agreement in your website.

posted on Friday, September 02, 2011 at 8:46 PM by North Face discount


Comments have been closed for this article.