$18MM can be a Pretty Darned Good Kick in the Pants
Like a lot of people in the Internet marketing world, I started my day this morning reading about the culmination of a new round of investment in SEOmoz. I have to admit to enjoying a certain amount of vicarious pleasure in what I know has been a rollercoaster ride for Rand and his team.
Rand has ridden that rollercoaster off and on since their first round of investment in 2007. They had another attempt in mid 2009, which didn’t generate sufficient interest for any of the prospects to offer terms. Then, in 2011, Rand reluctantly boarded the ride again, only to have the ride ended abruptly by a pledged VC for vague reasons.
By that time, I suspect he may have become a bit jaded by the entire process. Afterward, he seemed to have resigned himself to a more modest growth pattern, unaided by outside investors.
I have no idea what precipitated the 2012 effort, but from Rand’s incredibly transparent post, it seems to have been a board decision that it was time to initiate dialogue with some investors. Rand readily admits he wasn’t eager to go through that wringer again… who could blame him! But by this round, he was a lot more experienced in putting together a pitch and negotiating a deal. So he started reaching out to potential investors.
At some point, he found himself on the phone with Brad Feld, of Foundry Group, who was one of the many that had decided to pass on the opportunity to invest in SEOmoz in 2009. He was somewhat surprised when their conversation diverted from what he only hoped might lead to some introductions to the revelation that Foundry Group might be interested in leading the round.
From that point, the process was remarkably painless, and ended with Foundry Group in for $15MM and Ignition Partners for another $3MM. Eight days after the initial call. That alone may be unprecedented.
So, those that have followed Rand’s activities over the last several years, as I have, probably have a pretty good idea of what he and his team have been through. I’ve been through it before, both as a member of the diligence team and as a member of the selling team. It’s. No. Fun.
The parties, after a successful round, however, are absolutely AWESOME!
What this post is really about, though, isn’t the investment round itself. That’s just the end-game (or perhaps a start). What I want to touch upon is the way Rand has built what Gillian started back in the early 80s into a vibrant community-based business.
I won’t bother describing what steps were taken to climb from a half million dollar debt-hole to $20MM in the bank. I’m not privy to all that, anyway. But I will point out a few things that I’ve noticed about Rand that I think are key to his success.
TAGFEE is a major part of that success. In a nutshell, that’s the following tenets, by which Rand and his team manage the business:
Transparent, Authentic, Generous, Fun, Empathetic and Exceptional.
If you read any of Rand’s posts that I linked to above, you’ll realize that he takes transparency very seriously – more than any business owner I’ve ever seen. In fact, more than most VCs would be comfortable with.
As for the authenticity, I certainly accept it… whether you do or not is entirely up to you.
I don’t know Rand on a personal level, so I can only go by what I’ve seen. For instance, the fact that he and Gillian substantially devalued their own personal stakes in the company, in order to keep the shares held by their team members from being diluted in value as a result of this financing round. That’s not chump change, folks. They coughed up blood on that one. Cheerfully. I think that says a lot about a person and their values.
Come on! You can’t see a half dozen tweets from Rand or any of his team without sensing that! They enjoy a spirit of playfulness and camaraderie amongst themselves, as well as with others, that few companies can lay claim to, much less live up to, in the long run.
I think Rand and the members of this staff have shown empathy for SEOs and Internet marketers in the way they design their tools and the SEOmoz community and even their communication with others. But more importantly, in the context in which it’s apparently intended, they are empathetic of other individuals and their circumstances. Simplified version: be respectful of the feelings of others, even when you disagree with them.
This is the only tenet that I see even being open to debate, and that, only because “exceptional” is such a subjective term. I look at it as more of a “strive to be exceptional”, which I think they’ve done a pretty good job of. Are their tools the best that exist? Possibly not, but they’re pretty good, in my opinion… certainly a lot better than many. Is SEOmoz membership the most affordable? No. In fact, as much as I’d like to, I just can’t justify the cost for myself. If I was doing more hands-on SEO consulting, I’d probably feel differently. But again, the benefits of that membership are somewhat subjective. It’s more than simple access to their tools. For many, membership in that community alone might be sufficient justification for the $99/month.
Now don’t think for a minute that I’m putting Rand up on some sort of pedestal. I don’t agree with everything he says, and I’ve even taken great exception a couple of times. I don’t even know if I buy into his business model 100%. (Painful note: Nobody’s been beating down MY door to offer ME $18MM yet.)
I do, however, buy into his business philosophy. And I accept it as being totally sincere… a part of who he is. Whether you put a lot of stock in what SEOmoz has to offer or not, I think if you’re fair, you’ll at least admit that this isn’t a bad approach to running a business and building a community. And the fact that the company has been growing since Rand joined it at the end of the last millennium certainly indicates that they’ve been doing something right.
See, you don’t have to like a guy personally, or even agree with everything he says, in order to respect him. The few conversations I’ve had with Rand, I’ve found him to be really nice guy, both friendly and professional, so I imagine if we ever met, we’d get along great. I’ve yet to ever hear of anyone that had met him say otherwise. But the fact that he has a good deal of notoriety, runs a multi-million dollar company or is a really nice guy has no bearing whatsoever on whether I respect his demonstrated abilities. And I think the path of SEOmoz to date, under his leadership, is enough for me to give him a tip o’ my hat.
If you’d like to learn some of the back-story behind Rand and SEOmoz, and some of the synergy that has helped him succeed, I think the most revealing source, other than Rand’s own posts, is the transcript of an interview Andrew Warner did with Rand on Mixergy.com in June of 2010.
So – to Rand and the entire SEOmoz team, congratulations on this new chapter in your company’s future. And certainly to Geraldine, as well, a hearty congratulations.
And to Brad, I think you’ve made a good call, which will pay off nicely for everyone concerned.
It should be fun to watch. I’m looking forward to it!