AMA session with Shane Snow, an award-winning journalist, celebrated entrepreneur, and the bestselling author. He Founded the content marketing technology company Contently, which helps creative people and companies tell great stories together.
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Hey Shane, thanks for making time for the AMA! I’ll ask a first question now to start us off. At what point in Contently’s journey did you ‘know’ it was working and was going to be around for the long haul?
I’d say that there was a key point where we realized that “it was working” and then another key point when we realized the business was sustainable—that it wasn’t going to go away soon.
The first was when we started having happy customers, as basic as that sounds.
When we started getting emails from our users telling us how Contently was indispensable for their jobs—that was a big moment for us.
But the delta between that point and when we weren’t so worried about the business going under… was large.
I do think it was when we crossed $10mm annual run rate that we breathed a sigh of relief. We did the calculation that even if we stopped selling customers and even if our retention went down, we would have YEARS to fix things before the business would be done for. We knew that if anything unexpected happened we could figure it out in a matter of quarters, so the business wasn’t going to die unless something REALLY CRAZY happened. What a sigh of relief.
Hi Shane, thanks for being here. Contently is clearly a Dual-Side Marketplace, enterprises on one side, and freelancers on the other side. As such, the Contently has two sales pitches: one to attract enterprises and another one to attract freelancers.
Therefore, two questions:
If you had to pick one element, what was the most convincing for the VCs that invested in Contently: the added value that Contently provides to 1] the Enterprises or 2] the Freelancers?
What is your main KPI, except from the traditional ones (Customer satisfaction, # of customers, # of orders, # of recurring customers, CAC, LTV, ARR)?
1) Our investors have always been more excited, from a financial standpoint, about the value we provide to enterprises—and the SaaS revenue we generate in return—than the freelancers. However, our good investors have always understood that our Freelance Network is one of our killer features and a huge differentiator both in terms of product and brand. Truthfully, providing value to freelancers has been the linchpin to our business. It’s just one layer abstracted away from the actual profits.
2) The main KPI (that I focus on at least) is Engaged Time. How much engagement are our customers getting from the content they create and disseminate via Contently. This becomes a proxy for how successful their content programs are, and therefore how likely they will be to renew with us.
Hey Shane, thanks for making time! Can you talk about some of the levers that you strategically employed at Contently early on to help drive platform network effects? (Eg. more companies looking for content writers = more content writers join = more companies want to tap in). Did you ever struggle with marketplace liquidity issues at first?
We basically “hacked” the marketplace in the beginning by taking on one side of it ourselves. We started a bunch of blogs and created a bunch of paid writing assignments for them, then we posted on freelance writing forums announcing that some company called Contently had writing gigs for its clients. The writers signed up faster than we expected, and we used that database of writers to then turn around and pitch actual companies. We didn’t do anything with the stories they wrote for our fake blogs (though we did pay them of course!)
The problem we ran into after we started building the writer database actually became one of filtering for quality. Too many writers wanting work, and a lot of trouble to figure out who was good and who wasn’t. So we built our portfolio product that allowed writers to make a nice webpage for themselves for their own purposes (e.g. shanesnow.contently.com) and then we scanned their portfolios for data and used that to determine who was quality enough to go into our Network that we offered clients access to.
In your experience with Contently clients, do you see SEO and traffic generation as a big part of their concerns? How focused are their content creation efforts on bringing organic traffic to help them accomplish their marketing goals versus other goals with their content? Is this one of their top concerns, or is it not even on their list?
At this point Contently has clients with goals spanning from Awareness/Branding to LeadGen to Sales Enablement to Customer Retention to HR/Recruiting—and some clients do ALL of these with content. But the majority is in the Awareness and LeadGen categories.
But any of our clients who publish external-facing content (vs just on their intranet or for internal comms) is they get an organic lift on traffic over time—a compounding effect really. So we actually build that effect into our predictive models for performance tracking.
The ideal goal for most marketers who are playing at the top of the funnel is to eventually shift the balance from paid acquisition to organic acquisition. that takes content and time. But it’s kind of like a set of scales—you start out with more paid traffic being sent to your content, and eventually you pay for less traffic because your SEO and referral traffic is compounding. The strategy for what channels you use and how much content you create on an ongoing basis depends very heavily on which part of the funnel you’re focusing on.
Sales enablement, for example, is less about creating LOTS of new content, and more about building sequential content funnels (drip campaigns, etc.) and optimizing them over time, testing against new content, new sequences, etc. And you’re sending this content to your own contacts in your sales pipeline. Whereas branding and lead-gen is all about getting new people to come to you, so you’re publishing more content, at a regular cadence, all the time, and if you do it right the SEO benefits flow.
Thanks for the time, I am most interested in understanding year one. Key things in hindsight you could have done differently on the product side, customer count, pricing etc.
We went out to raise money in year one before we had proven a lot of assumptions that were really key, and that ended up being a bad idea. We ended up raising money, but it would have been much less painful if we’d stuck things out six more months and had more of an argument for why this business needed funding at a good valuation. We were also just not that methodical about which key assumptions for the business we attacked and in what priority. We just kind of went for it. If I could go back, I’d be a lot more deliberate about our experiments and iterations.
I also wish that at that stage we had been more clear and firm about not just our vision for where we wanted to go, but that we were agnostic as to the strategy to get there. As it turned out, we boxed ourselves in with our business model, and that took a lot of pain and effort to wriggle out of later when we pivoted from marketplace to SaaS. And that made it even harder for us when we started debating additional revenue streams (non SaaS) that could have fed us cashflow and really saved us in later rounds when we were cash strapped.
Could you expand more on the challenges you faced during the transition from marketplace to SaaS?
A remarkably frustrating one was even though we trained our sales people to sell SaaS, many of our old sales team kept with the freelance-forward pitch. We ended up having to hire new SaaS sellers to replace half of them.
In general that’s emblematic of the mindset shift that was just hard for a lot of people to make.
Apologies if this is out there already, but curious to know what prompted bringing in a new CEO? When do you know it’s time?
Honestly we should have brought her in two years ago. (She just started this summer.) Our CEO was burnt out and everyone knew it, but he hung in there out of a sense of duty, where the smarter thing honestly would have been to do a CEO search back then. The short version of the story, besides exhaustion, is we hit a wall in terms of where we founders could grow the business on our own, and at that point we needed to level up our operations expertise. Instead of bringing in an operator who believed in our vision (like our new CEO!), we tried to get to the next level on our own. And there were lots of blunders because of that.
Good news is our new CEO is the smartest businessperson I’ve ever met. The company’s in good hands with her now.
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I don’t think I fully understand what it means to be burned out but I have a better understanding of how it happens now that I’ve started a company. Love that you found a women too. Not enough of us out there yet!
I’m really happy we found her, too. She was head and shoulders the best one for the job, and it’s been great for especially the more entry-level women in the company who have never worked anywhere else to now be able to imagine themselves being a CEO one day too—and there are several folks at Contently (male and female) who I definitely foresee being awesome C-suite leaders at some point, and Pearl (our CEO) is showing an incredible example and actively mentoring them. So that makes me happy 🙂
Curious about rough distribution of earnings of writers on Contently? There’s been some stats released by other platforms creator talent monetization platforms like Patreon where the top decile of creators bring in close to 95% of the income. Was it similar at contently?
I don’t have the actual numbers, but that sounds about right. I believe at any given point in time some 15% of our writer network has work from us, and a subset of those are getting full time work. The rest are waiting in the wings for clients who need specialized expertise, etc.
The big difference over Patreon though is with Patreon some users have HUGE followings and pull in disproportionate amounts of revenue. In a talent marketplace, the spread between the highest earners and the average earner is not that big.
so we don’t have some handful of superstars skewing the average earnings.
How do you prevent other content writing network from poaching writers from Contently and offering them better economics? Or is this not a real problem?
This has been a perennial question since the beginning of the company, and honestly it’s never actually ended up becoming a material issue. Our goal is to provide so much value for our freelancers that it would be dumb for them to take the clients outside of our relationship. And like Uber and Lyft, we don’t mind if our network of writers/photographers/etc go find work elsewhere. We just want them to choose us if they have to make a choice. And we do that by, basically having built up so much goodwill and so many good features for our talent that it’s not really worth it for our competitors to copy them.
For example, everyone in this market has a portfolio on Contently. It makes no sense to create a second portfolio somewhere else.
That helps us out. But also we do some things economically that none of our competitors have been able to pull off (or have not had the stomach for it), such as: we pay freelancers upon submission of their project, not upon approval, and not when WE get paid by the client. So if you’re a freelancer you get paid faster for work on Contently than literally anywhere else. That has created goodwill, gives us benefit of the doubt and loyalty, and also makes many of our freelancers choose us over the other guys when they have to make a binary choice.
Our competitors could copy both of those things, but they’ve been caught up “focusing” on their software business that we have a huge lead and basically all of them just keep trying to partner with us or merge with us.
Which sounds kind of arrogant to say, I realize now haha. But we’re in a good position on that front.
One more question from me Shane – is there any core advice you might have for startups just starting out with content marketing?
Hm. The answer to this could get real complex real quick. I’d say read Contently’s content strategy series. I’m also about to roll out a content strategy and storytelling beginners educational series at snow.academy.
Hi Shane – What was your biggest challenge interms of growing Contently from $1 – $10 million?
Oof. There were like 1,000 big challenges. The biggest one I think has been hiring the right people and getting rid of the wrong people fast. Sales and retention are perennial challenges, but having the wrong team—or a toxic person on the team for too long—throws an enormous wrench in your ability to grow. I think we’d have gotten to $10mm a year or two faster had it not been for some serious staff-related blunders. But we learned from it, and have written a lot about what we’ve learned.