Rand Fishkin founded Moz in 2001 as a blog, calling it SEOmoz. It became an industry beacon, evolving into a SaaS platform that helped thousands of companies dissect and improve their search engine optimization efforts.
He left Moz earlier this year. His new book, “Lost and Founder: A Painfully Honest Field Guide to the Startup World,” is a transparent view of running that company and the lessons learned along the way.
I spoke with Fishkin last week about the book, leaving Moz, and his new venture, SparkToro. What follows is the entire audio of that conversation and a transcription of it, edited for clarity and length.
Practical Ecommerce: Tell us about your book, “Lost and Founder.”
Rand Fishkin: It is not like a lot of business books that sort of have a single point to convey. Instead, this is probably about 17 different topics, each of them described in a chapter. I’m trying to tell a lot of the stories from Moz and describe how different reality is when you’re building a startup versus the perspective that the media and the venture-capital-backed, unicorn-centric-startup world has. Silicon Valley startup culture biases founders to make a lot of dumb mistakes. This book will hopefully help you avoid them.
PEC: Would you make decisions differently with Moz, in hindsight?
Fishkin: Absolutely. Life should be a learning process. Hopefully, there are some things we’d all do differently the second time. I would say with Moz I made a lot of strategic and tactile errors along the way and I learned a tremendous amount. I hope that I can apply that in SparkToro but I also hope that those lessons are not purely for me.
One of the big benefits that I’ve had is when I have connected with other entrepreneurs or other folks who have gone through an experience and they have powerful stories to tell and experiences to share. Those experiences have helped nudge me towards better outcomes, better decisions.
One of the biggest mistakes with Moz is that I took the company’s focus off of self-service SEO for a wide variety of small-and-medium businesses and tried to get into many more forms of web marketing, tried to serve a much broader range of customers. Those were big mistakes because they took our focus away from where it should have been. Instead of being the best in the world at one thing, we were mediocre at a bunch of things. That is not a good way to stand out in a competitive market.
PEC: Did outside investors influence those decisions?
Fishkin: Because we raised venture capital, we thought we had to spend money fast to find fast growth. Those weren’t the right decisions for the business, however. Ninety percent of venture investments don’t return a meaningful amount of money — the requirement of three-to-five times the initial investment that funds have. If your startup is not returning that money, your investors aren’t very happy and therefore you, the founder, are not very happy.
PEC: Would you raise outside capital again?
Fishkin: I would and I did for SparkToro. But I don’t love institutional money, which is venture capital, private equity, those forms of capital. The reason is that their models are very biased to the very top of the investment pyramid. So if a venture capital firm raises a $400 million fund and invests in, say, 150 or 200 companies, maybe 20, maybe 10, will get most of the focus and attention will be responsible for the overwhelming majority of the profit to the fund.
PEC: What did you most like about running Moz?
Fishkin: I loved the attention, especially in those early years. I have a hole inside my chest that can only be filled by the praise of my industry colleagues. SEOmoz was not a very successful blog from the start. But as it achieved a sort of success I found myself craving it and trying to do everything I could to get my next blog post to do well.
PEC: Why did you leave the company?
Fishkin: I had a lot of conflict with the leadership there after I first stepped down as C.E.O. That came to a head after the layoffs in 2016. I stayed for another year and helped launch a project called Link Explorer and then left the company.
PEC: What’s your advice to someone aspiring to start a tech company?
Fishkin: Some of the best I can give is that a lot of entrepreneurs aren’t very self-aware. Maybe that’s true for all people. But many of us don’t understand why we’re driven to do the things that we do, why do we make the investments we make, why we sacrifice stability and comfort for this very risky adventure in building a company.
Often when I talk to entrepreneurs, I find that their motivations underneath are different from the path that they’re pursuing. That is sometimes evident in how they’re funding their company. They’re trying to build something that can be stable and provide for their family and give them a life that they’re excited about. Then why in the world are they talking about raising institutional capital? That doesn’t fit those goals.
It’s critical to be humble. I find that humility is lacking among many of us, myself included, in the startup and tech worlds. Keep an open mind and accept that you’re going to be wrong a lot of the time.
PEC: Is making money a good reason to start a business?
Fishkin: You’re almost definitely better off joining a big company and benefiting from moving up the chain, from stock options and other compensation. Most directors and V.P.-level folks at big tech companies are dramatically earning more than startup founders.
PEC: What companies do you admire?
Fishkin: I’ve been impressed with 37signals. It’s a small but distributed staff. Very impressive. Wistia, the video company, is another one that’s impressed me. Patagonia is another one. I certainly admire a lot of what they do even though I don’t love their fashion.
PEC: Tell us a bit about your new company, SparkToro.
Fishkin: We’re building software to help people discover the publications and influencers for their audience. We are six to nine months away from launch. I’m excited about what we’re building and hope to have something to show sometime early next year.
Our customers will be people who are running marketing campaigns for products and are trying to understand their audience better. We want to help them know where their prospects hang out, to avoid throwing a bunch of money at Facebook and Google.