The BOLD Show | Episode 15 | Driving Engagement Through Text
How you communicate with your clients is rapidly evolving. In this episode of the MINDBODY BOLD show, host Mike Arce talks with John Lauer, CEO of Zipwhip about the opportunities that texting with your customers gives you—and how to navigate potential risks.
In this episode, I'm here with John Lauer, an entrepreneur and well-respected veteran in the internet and telecommunications industries. John is the co-founder and CEO of Zipwhip, which allows businesses to text their customers. He also delivered the very first shortcode to some of today's biggest companies like Twitter and has spent over 20 years developing innovative business tools. Today, we're going to talk about the importance of using text messaging in your business as an additional form of communication.
[00:00:28] Growing a small business isn’t easy, and to be successful, we know three things for sure: You have to work hard. You have to be bold. And you must constantly learn. We're gathering some of the best minds in the business world to share their ideas and strategies with you so you can grow your business easier, be more profitable, and have a lot more fun being a business owner. We’re on a mission to connect the world of wellness, and this is the MINDBODY BOLD Show.
Drive Customer & Staff Engagement: Lessons on Texting, Trust & Leadership
[00:01:04] [Mike Arce] What's up everybody. I'm like Mike Arce, and welcome back to another episode of The BOLD show. Today, I am here with Mr. John Lauer. John, welcome to the BOLD Show.
[00:01:14] [John Lauer] Thanks for having me on.
[Mike Arce] Man, are you ready to be bold?
[John Lauer] Absolutely.
[00:01:17] [Mike Arce] All right. So first, before we get into anything, I'm here in Seattle right now, in your home court—literally, in your office, in your whole office, and this place is awesome. You have a ton of people here. How many employees do you have?
[John Lauer] It's almost 200 now.
[Mike Arce] That's a lot to manage. You know, there are people that are listening and watching right now that have three to seven employees?
[00:01:37] [John Lauer] We were there, too once.
[Mike Arce] And it's tough, even at three to seven.
[00:01:40] So, I want to dive into what kind of a manager do you have to become as you manage three people, and as you evolve as a manager as you get 10 and 30 and so on and so forth. And your biggest lessons there. And I also want to learn—as an entrepreneur, you've done some really great things. As CEO—I've heard some really great things, like from Jayce in the hallway that you are the example of what a CEO should be, which is pretty cool. That’s your team saying that without you there.
[00:02:07] [John Lauer] That’s great.
[Mike Arce] He could have said anything.
[John Lauer] That's great. I don't think I even paid him any money to say that.
[00:02:12] [Mike Arce] I don't think there's a CEO or a manager in the world that wouldn't want to hear one of their employees say that when they weren't in the room.
[John Lauer] No, that's flattering.
[Mike Arce] That's why everyone's here. So I'm sure people would want to learn that from you as well. But first, before we dive in, let’s talk really quick about the company that you built, so people understand that. It's Zipwhip.
[00:02:35] Tell me what is Zipwhip?
[John Lauer] Zipwhip is business texting software. I do think, for some people, it's sort of this foreign concept: Why would a company need business texting software? But just like back in the day, you didn't have email software at your business. And then eventually, businesses started giving out email software, like Microsoft Outlook. That inflection point is starting to happen today. Businesses have never given texting software to their employees. It's starting to happen. Zipwhip helped create the market for it. So it's a sign of the times. Texting is such an important communication medium now that you've got to be able to embrace it in the business world.
[00:03:13] [Mike Arce] Well and that's how most people prefer to communicate on a personal level.
[00:03:17] I actually have a cousin of mine who is 22 or 23, and she's like, “You always call. Why don't you just text?”
[John Lauer] It's almost rude to call now because we have texting. You’re supposed to pre-text and ask: Can I call you? And only if they text back, yes, do you call.
[00:03:32] [Mike Arce] There is this great comedian, Sebastian Maniscalco. And he said, back in the day, it was cool when people rang your doorbell and then it was great, like “Oh my god! I haven’t seen you in so long.”
[00:03:41] [John Lauer] That's the height of rudeness.
[Mike Arce] Now they’re saying, you should call first. And now it's almost like, don't call me, just text me first.
[John Lauer] Exactly. And that's what's happened.
[00:03:48] Even the way emojis are now part of the lexicon, things evolve and texting has definitely created this sort of niche. And the way we look at it here is that you've got things like email, which is low priority and long format. And then you have texting, which is high priority, short format. And it's counterintuitive that we needed both types of communication mediums inside humanity. And phone calls sort of end up fitting somewhere in the middle. They’re high priority, but they're a different type because they're synchronous: I'm stuck on a call with you and I can't hang up. That’s hard. Texting, at least, is asynchronous, but high priority.
[00:04:29] [Mike Arce] How long have you been in the texting world? Zipwhip has been around for how long?
[00:04:34] [John Lauer] So, Zipwhip has been around for about 9, 10 years. And I've been in the texting world since like 2003.
[Mike Arce] Wow. So 14, 15 years.
[John Lauer] It's been a while. But you know, I had done another texting startup, which today is called the Open Market. And we helped create the shortcode industry. And at that company, we actually gave Twitter their first Shortcode. We're the ones who gave them access to the texting communication medium before they had it. That sort of helped create, you know, what became Twitter. So it's been a fun ride.
[00:05:03] [Mike Arce] For the listeners and viewers, when you say shortcode, I know what you mean. But can we define that, so people when they hear it, they’ll think, “oh yeah.”
[00:05:12] [John Lauer] Yeah, I mean in contrast, ZipWhip text enables your normal phone number, your business phone number. It's a 10-digit number that everybody thinks about when they think about a phone number. Shortcodes are five-digit or six-digit numbers, and they're supposed to be like commercial use, marketing programs can run on them. There's still a lot of rules around them, but they're really kind of a niche part of the industry. What Zipwhip’s goal was, was to let every phone number be text capable, as opposed to what the industry has had for many years, which is shortcode.
[00:05:40] [Mike Arce] So shortcodes are the messages you’ll see that say “press or reply stop” to stop.
[00:05:47] [John Lauer] You got it. There are lot of rules around shortcodes to try to deal with the fact that they’re more marketing type messages. But they're really expensive. They're hard to get turned on. It takes like a month or two months to get them turned on. And to me, they're not really the future. The future is just everybody being able to text, from businesses to their customers.
[00:06:05] [Mike Arce] We do it in the way that I think you think texting should be done. You don't like mixing texting and marketing.
[John Lauer] Correct.
[Mike Arce] And I think that's where a lot of people get really scared with rules and stuff like that because they're thinking, how can I use text, and what people open often, in order to get my message out and get more sales. Whereas you're saying, that's how we like to communicate, let’s communicate this way more.
[John Lauer] Right.
[Mike Arce] OK, so what are some examples of how you believe companies should use texting. And then let's just go back and forth, one on one. What's an example of how they probably should not?
[00:06:42] [John Lauer] Right. OK. Good. The way I look at it is if you're going to pick up the phone and call your customer, you should instead now just use texting.
[00:06:52] So what would you pick up the phone to do? Would you go and put your phone on, like, a robocalling and sort of spam your customers? No, you wouldn't do that. So likewise you shouldn't do that with texting.
[00:07:02] I think it's important—just think, it's a high priority medium. It's going to ding their phone. It's going to be in their pocket. It might even wake them up. You've got to really be cautious about how much you use that power, because you can't go do stuff that's annoying them. And so that's when you start to kind of look at if you're going to do a marketing message. They may get it and read it and be kind of pissed off that you did that, because that's not really deserving of this high priority medium. It's got to be important to me. And there's other mediums, there's email for lower priority stuff, like marketing.
[00:07:32] [Mike Arce] Right. OK, cool. Now 200 employees. You started in 2000…?
[00:07:37] [John Lauer] So 2008 is when we really got going.
[Mike Arce] OK so nine years.
[00:07:43] So how long did it take for you to get to five employees, 10 employees, and let's just start there actually.
[00:07:48] [John Lauer] OK, so we started in my basement with two of my friends, who are co-founders that I was dying to do my next business with. Because I love these guys. And so that was about a year of just the three of us. And then we brought in our fourth employee, which is maybe the next year. So it took two years and we're still four people. It was right as we got our first office, which was probably around the two year mark, two and a half year mark, that we started to hire a few more folks. I think, maybe, [we had] eight people by the end of the third year.
[00:08:18] [Mike Arce] Right. OK. So when you first started your business, what was your background in business? Did you have like a really great college background? Or did you already have another really great successful business? Or was this, like, your first real big thing that you were getting into?
[00:08:36] [John Lauer] You know, I've been an entrepreneur my whole career. That's all I ever wanted to do. But you start out mowing lawns. It's your first entrepreneurial experience. And then you become a DJ, to do something that's cool. But you're being a one-man entrepreneur.
[00:08:51] I started my first startup when I was like 22 and I grew that to like 75 people within three years. It was called Rootlevel. It was a web application development company. We were building high-end software for the internet before websites and web apps were a popular thing. I think the term “web application” wasn't even really coined yet, and we started using it as our tagline. We ended up building the first version of GM.com, the first version of Ford.com. I was in Detroit. So we were like a really unique tech software firm in that city. So that was amazing, you know, to be a first-time entrepreneur and grow your company that quick. The hard part, though, was when the dot com bubble burst in 2001 or 2002ish, I had to shut that business down. So talk about getting an MBA in the most indirect of ways. You learn so much going through that sort of rise and fall of your first startup.
[00:09:46] [Mike Arce] You got a business up to 75 people. Then, you started a new business from scratch and got to 200 people and growing. So when somebody looks at someone like you, who has already accomplished this much and seems to be able to replicate it, usually the perception is: OK, his learning can stop. He can either go to work and do more of that, or go to the golf course, or do both. So is the learning done for you?
[00:10:12] [John Lauer] No way. I am not at the golf course. I'm sitting at home learning.
[Mike Arce] Well, it rains a lot here in Seattle.
[John Lauer] That’s true, there's not a big golf culture.
[Mike Arce] You guys got Ping-Pong tables.
[John Lauer] That's true, but I never play it.
[00:10:24] No, I would say, like, on weekends, on evenings, I'm constantly learning this stuff.
[00:10:29] In fact, I think my wife gives me a hard time: Like, “Honey, why don't you go and maybe play with the kids more?” Although I do plenty of that. But you know one of the craziest things is I end up watching a lot of YouTube videos. But not like gaming or entertainment ones, learning one. I joke that all of the world's knowledge is coalescing on YouTube. There's almost a video for everything you want to learn—whether it's about quantum mechanics, you know. Black holes.
[Mike Arce] Text communications.
[00:10:59] [John Lauer] Exactly. Anything you want, there's typically really amazing stuff there.
[00:11:02] [Mike Arce] So when you first started Zipwhip, and you're to two years in and you've got maybe eight employees. Now you have 200. What's the evolution of a manager like? What I heard is you are the example of a CEO. Which means you're focusing on the right things. You're paying attention to the things that you should be paying attention to. You're building leaders within your company to help focus on things that they should focus on. So when you start, what do you let go of first? What do you start trusting people with first? How do you lead a leader? [00:11:39][36.5] You know what I mean?
[00:11:42] [John Lauer] Right. You just used the word I was going to describe, is trust. [It] is the most important thing. I figured it out early in being a CEO was you've got to trust employees. And the reverse side of trust is you have to let somebody own something so directly at your company that they can actually hurt the company if they fail. That's to me the definition of real trust. So if you're going to go hire somebody to run your sales team, you have to so let them run it, that they can actually hurt you. And only then are they fully empowered. And I think it's that core philosophy, which can be scary and you've got to really sort of get comfortable with it, that creates real distribution of roles at a company in a way that lets you grow. The only way to grow is to relinquish control.
[00:12:29] [Mike Arce] Where did you learn leadership, because I understand that some people are born with maybe leadership intuition, and maybe some charisma and stuff like that. But no matter what, you still you've got to sharpen your saw. No one was born to lead 200 employees. So where did you learn, or who did you learn from?
[00:12:52] [John Lauer] You know, I think there's a lot of different ways I went about it. I would say, really early on in my career, I would go and sit at like Borders Bookstore on the weekends, even when I was still, sort of, at the end of college. And I'd go buy a coffee and I'd go take like every book I could from the business section and sit there all day and read it.
[00:13:11] But of course, I had no money as a college student. So I'd go put the books back on the shelf and never buy a single one. And all I really did was spend money on a coffee that had free refills. And I started, like, at one point I'm like, wait I've read most of these business books. And I think it's just from going through that process that you start to pick up all of these things, on what leadership is like, what it takes to build a company.
[00:13:31] One of the books I really remember was Good To Great, which just talked a lot about the growth of stuff. Crossing the Chasm was one of those early books, too. That was less about leadership and just more about how software products evolve and I think that we still play that out every day. And then early on too, I had a guy come in who had run his own company for like 40 years. He was retired. And I said, would you come in for like a year, part-time, to just to help. Be like a coach. And he agreed. I couldn't believe it. This guy was like an icon in the ad industry in Detroit. And so that was a lot of learning going on through that. And I think once you really start doing it, you start to learn directly, what works, what doesn't. Where did I just fail? Where can I improve? You're constantly contemplating your own navel of like, how did I do today? What was right? What was wrong?
[00:14:23] [Mike Arce] So, as a CEO, regardless of what level you're at, obviously there are going to be more things to look at as you get bigger. But what are some of the fundamental numbers, the metrics that you pay attention to, to make sure that your company is going in the right direction? [00:14:38][15.0] [00:14:38] [John Lauer] Okay. So this is my third startup. Each business is a little bit different, but there are some fundamentals. You know, you really are always looking at revenue. You're always looking at cash. Cash is king.
[00:14:49] [Mike Arce] When you say cash, net profit?
[00:14:51] [John Lauer] No, not necessarily. Because I actually think that when you grow up and you maybe take some of your business courses, you're almost told that you must be profitable.
[00:15:00] I actually think that there's an almost more intelligent way to run a business, which is not necessarily profitable today, but on a curve to profitability years out. That's harder. And you've got to almost like keep things even tighter.
[Mike Arce] Well, GoDaddy was like for almost 18 years.
[John Lauer] Exactly.
[00:15:14] I mean, look at how many companies out of Silicon Valley are not profitable, and then they go public even. And then eventually they make a profit.
[00:15:20] Facebook is almost the perfect example.
[Mike Arce] But for a small business, brick and mortar.
[John Lauer] If you’re a small business and you're not on sort of this trajectory, like a software company would be, or like a VC-funded entity, then absolutely. You've got to watch profit. And that's how I built my first startup. It was all based on profit margin. And so the moment we made profit, I'd go hire people to sort of eat through 80 percent of the profit. You want to leave a little bit of a buffer and then the moment revenue goes up, you go hire more people. Because you're always sort of trying to be on this trajectory of growth. But I think it depends of the business. You may not want to just keep hiring and hiring and hiring. So it sort of depends on what your goal is.
[00:15:57] [Mike Arce] The people that watch and listen to this show, generally they’re fitness studios, they’re spas, they’re even chiropractors or massage studios. So they have, you know, anywhere between 1 to 15 employees at a location. Some a little more. But for the most part it's right around there.
[00:16:21] And I've noticed, as a trend, is they undervalue sales. What I mean by that is, they are looking for the cheapest salespeople they can find, but expect the highest results in return. You have a floor, from what I saw, I mean I don't know how many salespeople you have.
[00:16:43] [John Lauer] It’s about 100 salespeople.
[Mike Arce] 100 salespeople.
[00:16:46] OK. And so, talk to me about, what are the things you look for when it comes to finding a great salesperson? Because a lot of the people that start businesses in these industries, they are admittedly not salespeople, right? They will tell you: I hate sales. So when that happens, unfortunately, you don't really know what to look for either. And so I'm going to use you in this example. You've got 100 here. So what are the things that you look for in a salesperson? And then, how do you feel they should be compensated?
[00:17:16] [John Lauer] Yeah okay. So we look for people who are full of energy. For us, it's just a lot about outreach. You’re picking up the phone, you’re calling people, you’re just trying to create energy out there. And so we aren't even looking for somebody who's got, like, a certain degree on the resume. In fact, we're more than happy to hire people right out of college, where there really is no resume items yet. But we are looking for just a passion and an energy. And so that's worked great for us. We do have a pretty structured sales process too, though. We run them through a 30-day training process. And then they graduate, and we even do a graduation ceremony. We have sales trainers. We sort of nurture you. We have team leads. We have mentors.
[00:18:00] So we put a lot of pieces in place around new salespeople, to get them up and running quickly. I think an important part is you want to get a salesperson successful very early on, or they lose steam. Even though they might have the most energy and the most ambition, they can also sort of get frustrated. And so you want to make sure they’re successful, because success begets success.
[00:18:22] But you're asking, too, about how do we compensate? We want to make people be able to build a career. We don't want to—there's this notion of sales being like this “churn and burn” mentality. It is the complete opposite here. We want you to actually be able to build your career and stay here for years to come. And help the company grow with it. So you want, of course, to compensate people the way that this is like a career to them.
[00:18:46] [Mike Arce] And I've seen people that are in these industries—they will hire them, but then they will almost lower their commissions as they start making a lot of sales, because they feel like the salesperson is making too much money. Well, I've met some really great CEOs that have talked about the salesperson. If they're producing and they're bringing in that business, I mean, in a lot of organizations a salesperson sometimes makes more than some C-level employees.
[00:19:13] [John Lauer] I agree with that mentality. I actually think it's totally fine and appropriate for the salespeople to make more than anybody else at the company. They're on the frontline of the war out there. I think it's one of the more brutal roles at a company. And so therefore, you should also get compensated. So, I have no problem with that.
[00:19:31] [Mike Arce] Awesome. So, now you're here. What does your daily routine look like? And I'm sure that is a bad question, because the way I look at it, you may not have a routine. Is every day a little bit different for you.
[00:19:43] [John Lauer] Every day is a little bit different, but there's definitely some routine too.
[00:19:46] [Mike Arce] So what are some of the routines that you [have], or things within your routine that you stick to, to make sure that you are focused as an entrepreneur?
[00:19:53] [John Lauer] Yeah, I think for us, we're more business texting software company. And so we've got the stuff that's inward facing, and then I've got the stuff that's outward facing. So like, we work with all the wireless carriers to make sure that we can always text-enable businesses. But the carriers are the ones who own the texting network with respect to your cell phone. So we have to make sure everybody is always gelling. And so, there is a big part of the role where you're external facing and working with the industry. There's a lot of things around policy on the texting network. I mean one of the unique things is—it's the most curated communication medium we have out there. Phone calls aren't even anywhere near as curated as texting, and email is almost not curated at all. Your email inbox is just full of spam. So that becomes part of the job. There's the stuff that has sort of the common cadence to it.
[00:20:44] I do a management meeting every Monday afternoon. Every Friday we do an all-hands staff meeting. We bring everybody together. We buy everybody lunch, and we come together for a big “rah rah” session for about 30 minutes on Fridays. And so there's sort of that repetitiveness to it. But it's also there's a comfort to it, and then you know, maybe a random week you're on a flight to go meet with customers. Or even go meet with the FCC every now and then just to talk about, what's the nature of policy in the texting industry? What's going on out there?
[00:21:17] [Mike Arce] Because in your industry, there are rules that are changing and evolving over time and throughout the year. So it’s your company’s job to stay ahead of those rules.
[00:21:24] [John Lauer] Yes. I mean the way I look at our position in this industry is as a major player enabling businesses to text-enable themselves. We then also have a strong leadership position around policy. You know, to some of your earlier questions about how to use it correctly. It's a big policy debate, every now and then, in the industry.
[00:21:50] [Mike Arce] Well, I'm very impressed. I was walking down and I saw all the people here and everyone's working. And the great thing that I saw, as well: You broke it up to make sure that your employees can accurately talk to your customers. So it was kind of cool. There was, like, a real estate, there was a beauty, there was a fitness.
[00:22:10] [John Lauer] Oh, there’s health care. There’s insurance. There’s everything.
[00:22:13] [Mike Arce] So you had everything broken up.
[00:22:15] And I found it interesting, because immediately I caught on. They can speak the language very, very well.
[John Lauer] That’s exactly why we do it that way. Because business texting software is sort of applicable to all businesses out there—whether you're a pizza restaurant just looking to let people text in their pizza order, or you’re a health care [provider]. You know, you're a chiropractor trying to let your customers reschedule their appointments. But the way you talk to them, and the value propositions, get kind of different enough per industry. We go to a lot of trade shows. So those teams that you met, they'll go down to a trade show for a specific industry. And that really matters. But you know, folks that are selling into automotive aren't necessarily going to be in their element at a fitness conference.
[00:23:01] [Mike Arce] Yeah, and I saw you guys at the fitness conference. Pretty cool.
[John Lauer] Exactly.
[Mike Arce] Well look, I don't want to take too much more your time. And also I think I'm going to go grab a drink with a couple of your team members here in Seattle. So I want to thank you so much for your time.
[John Lauer] Thank you.
[Mike Arce] This is a really great business that you have built here, and everybody here has been so cool. For everybody watching and everybody listening, thank you so much for tuning in. And we will see you next week.
[00:23:27] Thank you so much for joining us today. If you like this episode, then subscribe to our podcast on iTunes, Google Play, or Stitcher.
[00:23:34] And to our YouTube channel to never miss an episode. You can get all the links by going to BOLDShow.com. Thanks and see you next time.
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