In San Francisco, we meet founder and CEO of BranchOut, Rick Marini. BranchOut was already the third startup idea of Rick. Rick describes how he came up with the idea and founded this company and how the current business model works. Rick also provides great and helpful advices for young entrepreneurs.

The transcript of the interview is included below.

INTRODUCTION

Martin: Hi, today we are in San Francisco with BranchOut. Rick, who are you and what do you do?

Rick: I am Rick Marini, I’m the founder and CEO of BrachOut and I’ve been an entrepreneur for the last 15 years out here in Silicon Valley. I’ve started three companies. Tickle.com was the first one back in 1999, and we grew that to be the largest personality testing site online. We sold that to Monster in ’04 for 100 million dollars, and then I started a second company, called Superfan which built Facebook apps and social games and we pivot that over to BranchOut, which a large professional network, leveraging Facebook with about 800 million professional profiles.

Martin: Great.

BUSINESS MODEL OF BRANCHOUT

Martin: Let’s talk briefly about the business model of BranchOut. How did it work in the beginning and have there been any changes to the business model over time?

Rick: Yes, it’s been a rollercoaster with BranchOut, plenty of changes as in any startup. You know BranchOut really started as a way to leverage our network within Facebook, which tends to be your friend network, people that you are close with, and leverage that for professional purposes. Typically people would use it for recruiting or finding a job, or sales, trying to build your network, and BranchOut really grew quickly early on because it’s a network effect business, the larger the network the more powerful it becomes. You want to invite all of your friends, and people on Facebook have an average of about 350 friends, and they were inviting everyone so we grew quickly and that’s how we’re able to get to 800 million members. On the business model side, we focused on recruiting. So giving recruiters special tools and access into the database so they could identify who they knew at different companies, and it’s not just who they know it’s who their friends knew, so it was really being able to grow with that kind of 6 degrees of separation to be able to leverage a giant database of 800 million people.

Martin: How did you reach the first, let’s say 10.000, or 100.000 members?

Rick: Yeah, so a lot of that is a really leveraging your own network, inviting everyone that you know to join the service and luckily for us, we knew people who had big networks. So some of the early people who started to really spark back growth they invited their network and luckily for us it was a really influential network. People who had big Facebook followings and twitter followings, that really started to get the world out there quickly, so really like many entrepreneurs you invite everyone that you know, friends, family, and everyone you ever met and try to get them to use that service early on.

Martin: Okay, great.

ADVICE TO ENTREPRENEURS FROM RICK MARINI

Martin: You told us in the talk before, that you have so many learnings over the years as being an entrepreneur for 15 years, can you share some of your learnings with us?

Rick: Sure, it’s been a rollercoaster for 15 years. I love being an entrepreneur but this stuff is really hard. It’s kind of like being an actor in LA, I think, where, you know, everyone wants to be Brad Pitt, or Julia Roberts and make 20 million a movie and all that stuff, and everybody up here wants to be Mark Zuckerberg or Larry (Page) or Sergey (Brin), but the reality is, a lot of people waiting for tables in LA, and a lot of people that try to be an entrepreneur and never achieve the success of Mark Zuckerberg. But the reality is there’s nothing that I’d rather do, I love being an entrepreneur it’s great, you just have to know what you’re getting into, because it really is hard. You can never turn it off. You’re always thinking about your business, you’re always pitching your business, you can never shut it off. When you go home, you’re probably not actually going home directly, you’re going to some tech event, especially if you’re here in bay area where there’s’ tech events every night. So I’ve had the highest highs and the lowest lows in the same day. I mean you have to have the real stomach of steal to ride the rollercoaster and just understand what you’re getting into.

Martin: You have been recently acquired by Hearst and any learnings that you get from that kind of exit route?

Rick: So we’re just acquired this week by Hearst so this is great timing for this discussion. We’re very excited, Hearst is a world class company, and we’re going to have the chance to act as entrepreneurs within Hearst. They’ve created a new digital product group that I’m heading up, so that’s wonderful. We have the security of Hearst, but still acting as entrepreneurs, to that’s been great. I think every entrepreneur has the dream of taking a company public, the reality is that the most successful companies end up getting acquired, what we just did this week before they ever get to the IPO. It’s really hard to get to the IPO. And it’s bitter sweet because you love having the control, and responsibility as an entrepreneur but you are also know you are working towards a building a company of real value, and again either it’s an IPO or more likely an acquisition, and there is a bitter sweet moment of, now I’m kind of giving up my baby, luckily for us we get to continue on with Hearst and manage that, but, to be honest, we are very excited to be part of Hearst, like I said, it’s a rollercoaster and it feels good to be part of a great company in the end.

Martin: A lot of young startups or maybe single developers try and think about “OK, let me build an app for another platform, like IOS or Android of Facebook or whatever”. You did it by yourself. You used Facebook for your services. Are there any learnings that you need to consider as an entrepreneur when you make your business model so much dependent on another platform?

Rick: Absolutely. You know, for us, with BranchOut growth, there is no way we could’ve ever achieved those kinds of numbers without Facebook. There’s also a downside that you don’t control that platform. So, on the early days of BranchOut, we grew quickly, we were adding 400.000 new users every day with zero marketing, just for free. We were leveraging on the Facebook network to the fullest, we really did a good job with that, but then Facebook made some changes later that made it tough for every app developer to be able to achieve anywhere near that kind of growth, and that’s something that’s a really good lesson for other entrepreneurs: when you develop for another platform, you don’t control that, you don’t control the rules. And they can change rules at any time, whether it’s Facebook or LinkedIn or Apple or Google, or whoever it is. That said, when you’re developing for mobile, you’ve got to develop for iOS and Android, you have to, that’s 90% of the market, two of them combined. Android is interesting because you get to market quicker, but you’re also developing for a lot of different platforms, lot of different phones. But at the end of the day, mobile to me is a future of communication, of technology, so for people who are developing apps for mobile, you’ve got to be on both iOS and the Android and you’ve got to play within the rules of Apple and Google and, luckily, both of those companies, I think, have done a good job at building real solid developer ecosystems.

Martin: You started several companies. Is there any specific process behind, how you select your next business venture?

Rick: Sure. I think that lot of people like to start companies based on their personal passion, and I think that’s great but your personal passion also has to translate into your ability to raise money from investors, to be able to attract employees, and to be able to have a real exit later, because investors are investing for return. I think there’s lot of people that want to start the next music site or sport site, and sometimes that works, Pandora and Spotify are networks that work. But at the end of the day, I think finding something that you can build that, for me, can change millions of lives in a positive way, is what my passion is. If you can find something that gets you fired up every day, whether it’s a personal passion or it’s just something that, again, can have that kind of global impact, that gets me excited. And being able to work with great employees and great advisors and investors, when you bring all that together, that, to me, is what’s exciting in starting companies.

Martin: Did you start with some kind of a long list and then try to shorten up and then come up with three or four great business ideas or did you decide for one or two or how do you go for starting a company?

Rick: So, for my first company, Tickle, we started that because I was at Harvard business school with my class made James Currier, we took the Myers-Briggs test back in 1997. We started the company in ’99, upon graduation. But we realized, and this was years ago, that no one had ever done this online. That was just kind of the spark of “Wow, we can bring all these quizzes online”. With BranchOut that was by accident, I think a lot of companies are started by accident, where somebody had asked me for an introduction to a Facebook friend and I forgot which one of my friends worked at that company. So, I asked one of my engineers to build me a little widget that could go through all my Facebook, and I’ve got over 2000, friends, going through manually would’ve taken too long, and then we had the spark of “Wow, this is really powerful, a lot of people would use it”. It’s probably often, companies are started based on either your personal itch you need to scratch, like for BranchOut, or you just see this big opportunity where you’re like “Wow, no one has ever done that before”. It was lot easier to do that back in 1999, when internet was a lot younger than it is today. But I think those are definitely good ways to start companies – I have an itch that needs to be scratched, and if it’s something that impacts a lot of other people, there may be a business.

Martin: Are there any other learnings or advice, or maybe even mistakes that you did that you can share with…?

Rick: In terms of advice, one of the things that I think, young entrepreneurs or people who want to be entrepreneurs should think about is that when you start your first company, if you’ve never worked in an entrepreneurial setting, you’re making it really difficult for yourself. My advice would be – go work in a startup, especially one that’s got some funding, an A or B round of funding, and go learn from a great entrepreneur. Go see the mistakes they make, see the wins they have, the successes, and learn from them. So, instead of going back for your MBA for two years, like I did, go work for a great startup for two years, take that learning, and then go start your company. But, I think, without having those learnings, you’re going to make mistakes that someone else could’ve made on their dime while you’re learning and earning a wage, so that to me is one of the big things that I think young entrepreneurs should do. Another, that’s just really general, that has helped me in my career is to do a couple things that are really simple. They’re simple, but you got to work on them:

  • One is: work harder than everyone around you. That’s something that I did early in my career, I worked a lot hours and I did that so I could soak up as much knowledge as I could and also be seen as the go-to guy.
  • Number two: have a good attitude. Attitude goes a long way. People who have a good attitude and are willing to work hard, those are the people who get mentored by the best people, because I want those people on my team, I want to hire those people. Smart people with a good attitude that are willing to work hard can go really far, whether that is professionally, or personally, whatever it is.
  • Simple advice – just do that and you’re going to go pretty far. If you want to be an entrepreneur, go find a great company, learn there for 2 or 3 years, take all that and then you’re in a better position to start a company.

Martin: What advice you would give to a person who wants to start a company? He’s now in a safe job, working. Would you rather think “Quit the job and start a company” or do you rather advise them to build a company on the side, on weekends, for example?

Rick: If the company they work for allows them to do that, then that’s not a bad idea to start. And the reason for that is that quitting your job, especially if you have any kind of family obligations, if you have a wife or children or house, that’s a scary thing to just say “I’m going to stop working at my safe, secure job and start a company”. Test some ideas, see if there’s any traction, because sometimes there are great ideas that just don’t have the execution behind them. The flip side of that is – can you really execute, if you’re doing this part time? That’s why I’d go back to: it really depends on your situation. If you have the ability, if you have the financial freedom to say “I don’t have to do this job, I can go and take a chance”, then go ahead and take that chance. If you don’t have that flexibility or freedom, and if the people that you want to hire don’t have that as well, maybe you do this on nights and weekends if your employer allows you to do that, just to see if there’s some traction, as soon as you start to see some real sparks that this is going to work, that’s when you say “OK, I’m going to go for it 100%”. Because it’s not just you that is potentially leaving the job, it’s the people that you need to attract to come work with you. That’s scary, because when you as a CEO take that responsibility on, not just for myself, and for my family, but also that on all this other people, you’re now responsible for all the their families, making sure you hit payroll and making sure that the company is going in the right direction. That is a bigger responsibility than I think people who haven’t been an entrepreneur realize. It’s scary and every CEO should take that seriously because people are putting their fate and their families trust in you.

Martin: What would be the right point to raise outside money? Because a lot of people also try to bootstrap and when should they stop bootstrapping and maybe even fuel the company with outside money?

Rick: There’s typically two times early on when you raise money. One is just a whiteboard and an idea, which you’re going to raise out of lower evaluation because you haven’t proven it out. The other will be when you have real traction, maybe you bootstrapped it, maybe you brought some angel money in, and then you’ve got traction, you can go raise in a much higher evaluation. Of course, the scary part is “What if don’t ever get there?”, and lot of people just want to get out there and raise couple hundred thousand, maybe five hundred thousand, just to get going, and I think that makes sense. I’m going to go back to what I said a minute ago which is: if you can do something kind of on the side, to prove out there’s something there, that could be the time to start raising some angel money. If you would like a convertible note, make it really simple, and raise maybe $500.000, something in that range, just so you can get yourself and maybe couple engineers on board and start to build towards a more robust product, get some traction and then you go out for some series A. Especially if you’ve never been an entrepreneur before, it’s really hard to go into a big, serious aid with just an idea in the whiteboard, because you don’t have a reputation yet, you haven’t built that up. For more experienced entrepreneurs, that maybe had an exit or two, and have a well-known brand in Silicon Valley, they can often go right into the series A because the VCs have a relationship with them.

Martin: Rick, thank you very much for your time and maybe next time you should also BranchOut.

Rick: Thank you!

Share your thoughts and experience

E-mail is already registered on the site. Please use the Login form or enter another.

You entered an incorrect username or password

Sorry, you must be logged in to post a comment.