120: Focus on the Top 20% with David McClellan

18
May

David McClellan is a serial entrepreneur and founder of Social Catfish, a company that helps consumers find lost personal connections and verify if people are really whom they say they are online. We discuss the challenges of hiring a marketing firm, the limits of being protected online, and having a realistic workload for your team.

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Listen to the podcast here

 

Focus on the Top 20% with David McClellan

Our guest is David McClellan, a serial entrepreneur and founder of Social Catfish, a company that helps consumers find lost personal connections and verify if people are really whom they say they are online. David, welcome to the show.

Yeah, thanks for having me, Steve.

It’s great to have you and I’m very curious about your company and your journey. I mean, how does, what does it take for a procrastinator to become actually a launcher of multiple successful companies? How can you launch a company when you’re a procrastinator?

It takes changing. That’s what it takes. It takes not being a procrastinator. Although I do say that like being a, you know, growing up as a procrastinator, you learn to prioritize the things that are important. You know, getting that, you know, homework assignment done and, you know, when it’s due and making sure you can prioritize that and get that done has helped me, you know, build and scale business by focusing on what’s going to move the needle.

Okay, all right. So, okay, so you overcame your procrastination, and then what happened? So how did you end up with the social catfish and the predecessor companies? How did your journey lead to here?

Yeah, so I mean, it’s a long journey, but long story short, I was in the car business early on and when I was younger and our local economy was hit harder than any other part of the country in the 2007 recession. And so I went from making about 100 grand a year to about $1,200 a month. And so my family and I, we were hit really, really hard. And during that time, I knew I always wanted to be an entrepreneur. I was always thinking and writing down business ideas. And when your income gets slashed, the risk of doing those things becomes more appealing.

And so during that time, I tried a few things out and then I started a digital marketing company because I started realizing that anything I was gonna do, I’d have to build websites and market those websites. And so I started doing that. One of my clients got bought out by CBS, the broadcast company, CBS Interactive. And so I ended up coming on board and doing SEO for them. And while I was doing that, I was starting websites up and I would sell them or I just make money from a period of time.

And then eventually built socialcafe.com, which was significantly different from a lot of the projects I had worked on in the past, where you saw, with some of the other things we worked on, we started a project, made a little bit of money, or made it valuable, and then was able to sell it. And with Social Catfish, I just saw this long future. And it was that pivotal point in my life where I’m like, look, it doesn’t make sense to just continue to build websites over and over and over. You know, there’s an actual business here that I can build and, you know, and then just really ran with it.

You know, David, it’s so interesting, your story of how you were doing the marketing for other people and then eventually you figured out, I might as well do it for myself. And you know, I have had this lingering suspicion for a long time that the challenge of hiring a marketing firm is that only those people are available for hire who don’t really know how to do it because if they did, it would not be worth their while to stay in a job.

So, I have a love-hate relationship with marketing firms. I have buddies that I know are very good marketers and very successful that own their own agencies. I’ve hired many, many agencies. I’ve spent hundreds of thousands of dollars through third-party agencies. And I think the difference is, is like you can’t teach giving a shit. And so the difference is, the way you’re gonna care about your business versus somebody else, you can’t teach that. And somebody is just not gonna care. The other thing, just like you said, is that people that are really, really good, they typically don’t work for other people, at least long term.

People that are really, really good, they typically don't work for other people, at least long term. Click To Tweet

And so that’s the challenge I’ve run into where, you know, I, I still run ads for the business, which is unfortunate, by the way, like, I’m not, I know, I’m not the best person to run ads. But I run ads way better than any, any agency I’ve ever hired. And I’ve hired some really reputable agencies. And so, you know, it’s, you know, they have processes and, and, and, you know, they only want so much amount of time spent on a client and they want certain margins. And because of all those different variables and you get the mix of the really good people don’t stay around very long, it makes it difficult to find people.

It doesn’t mean I haven’t found some okay agencies or people that have done an okay job, but nobody to like my standards and nobody that has been more successful than myself. And not saying I’m the best person out there at running ads or doing all this stuff, but I think there’s a special, like when you care about something, as an entrepreneur, like the way you’re gonna treat it, the time you’re gonna spend, and what you’re willing to do is significantly different than somebody that you have some sort of transaction with where you’re giving them a dollar and that dollar’s worth a certain amount of time for them.

You know, when I came out with my first book, I got connected to a very successful author who has published 11 bestselling books and he actually makes six figures with his books only from the royalties. And I asked him, who do you give your marketing? Who does the marketing for you? I said, I have to spend two hours a day just tweaking my Amazon advertising because it’s just, that’s the only way it works.

So I hear you, I hear you, that happens. Now, switching gears here. So this podcast, as you are listening to know, it’s the Management Blueprint, so we’re always looking for some kind of a framework. And you talked about, on our pre-chat, about the 2080 rule, the Pareto principle as being your major framework that you are using and leveraging all the time. So tell me how you are doing that and why is this your most important framework?

So, growth motivates me. I wanna grow the business exponentially. And so for me, the money’s great, but I wanna have a big impact on, you know, like everything and what I touch. And so even when I worked for CBS, the thing that got me most excited is that I had such a large impact on the business, on the revenue, on so many millions of people every single month. And that’s what keeps me excited nowadays. And so, you know, what I’ve learned over the years is like, if we can focus on the things that are gonna move the needle, those other things become significantly less important. Doesn’t mean that those things won’t come up later on and the priority on those things increase, but you can build a business by focusing on that top 20%.

What I've learned over the years is like, if we can focus on the things that are gonna move the needle, those other things become significantly less important. Click To Tweet

And the way we do it internally, we have an acronym called SISEY, which is basically how we model out anything. So as we work on projects, we break down what the priorities are, what’s the story, what’s the expected outcome, and then what the priority is. And we have three different priorities that we base things off of. So it’s either a business need, high revenue impact, or a legal need. And then there’s different sub-priorities in there. And so based on how those things score determines on like where we move it up the roadmap or how we prioritize it within the executive team.

Sometimes there are things like just testing that we don’t know exactly what the outcome’s gonna be, but we make an estimate, say, hey, look, based on this, we think this is gonna happen. So one example right now is we’re prioritizing a lot of short-form videos. And so I’m wrapping up a team right now, we put together a massive content strategy, you know, I’m bringing on script writers and people that can do skits for us, and we’re prioritizing the short form content over lots of different verticals, over lots of different counts, because I’ve seen it work and we’ve reverse engineered a lot of this.

And so, do I know it’s going to work 100%? No. But do I think and am I highly confident it’s going to work based on, you know, hard data and proof? Yes. And so, we’re prioritizing these efforts, and so it’s taken a lot of my time. I have people from my team that are working on it. And so that’s just one example of that. And we do this across each different business unit. So like our dev team would, would do things slightly different than say the executive team, but we all use that 80 20 rule. Um, it doesn’t mean that 80% doesn’t get done. It just means that it’s less of a priority, um, on when that gets done or when it gets scheduled out. And so we always try to reprioritize that top 20 percent.

I love it. So when you say it’s SISEY is the acronym, what does it stand for?

So, yeah, so the S is story. So, you know, if you have if you work with anything like, you know, JIRA or anything like that, you know, you want to know the story. I is issue type. So, like, what the issue is, are you trying to fix something? Are you trying to, is it a bug? Is it part of a larger epic or project? S is supporting documentation. And so, with everything we do, we have to have, you know, what’s the documentation to prove what it is. If it’s, you know, a new project, you know, why do we think it’s gonna work? And then E is expected outcome. So like, what do we want out of it? Or what do we expect to happen? And then Y is yours and your team’s priority. And so, you know, we base the priorities off, you know, those things that I talked about earlier. Hey, is this a business impact? Does it impact revenue? Is there a legal impact? Or is it directly impacted to like a business unit?

Okay, so SISEY with an E? SISE?

Yep, SISEY.

SISEY, so what the Y is?

Yours and your team’s priority. And so one thing I’ve learned in the business, we put SOPs or different things in place, but things that are more important, we create acronyms from them. And so every week we’re like, hey, did you sissy this out? And I wanted to pick an acronym that people kind of laugh at. And so that’s kind of where it came from.

Love it. That’s really cool. So talking about the Pareto principle, so how do you know that it is the top 20% if you haven’t done it yet?

So, what we do, so we do this a few different ways. So we have, you know, with like product and our roadmaps and our dev team, it’s done one different way, with the executive team it’s done another way. And so what we do with the executive team is, I jot down, you know, like quarterly goals, semi-annual goals, and annual goals and say, hey, look, these are the challenges that the business is facing, or these are the annual goals for the business. These are the things we’re trying to accomplish. And I leave them somewhat broad. And everybody on the executive team has access to this.

And what we do is we do executive sprints and our sprints are every 30 days. And so based on these executive sprints, the executive team comes to me and says, hey, look, these problems, I think we could do X, Y, or Z to solve this problem. And so, you know, though I try to really empower them to come up with their own ideas, for sure it’s a collaborative effort, but like one of my favorite books I’ve recently read is called Multipliers. And, you know, and so for me, like I wanna learn from my team. And so I don’t want to micromanage or tell them exactly how to do things all the time. For sure, if I have input, I’ll go in there and say, hey, look, what about this? Or what about that? But I want to hear their ideas first and try to learn from that, or even challenge them to think in that way to solve those problems.

Because there’s been like many times we’ll be in executive meetings and we’ll be, somebody has an idea or whatever, and then somebody chimes in that’s not even in that department says, hey, well, what about this? This is the experience I’ve had. So it becomes a really collaborative effort. And so based on those parties of the business, the basic tasks that we come up with become part of our 30 day sprint as an executive team. And so everybody comes and either says, hey, I commit to doing this, or sometimes I’ll sign those out. So sometimes there’s very specific direction that, you know, things that I need done with a certain time.

So, you know, for example, when we were launching our mobile app, I’m like, look, it needs to go out by this date, you know? So that’s a very specific task where, you know, something else, you know, we’re looking to increase our conversion rates for users who come on with a trial and stay on with a subscription. So the exec team has come up with some ideas and they’ve committed to launching those ideas within the next 30 days. And so that’s how we approach it.

So you have annual goals, you have semi-annual goals, you have quarterly goals, and then these are fairly broad. And then your team suggests 30-day sprints at the executive team, and then you have the two-week sprints at the dev level, right? One or two-week… One-week sprints for dev?

Yeah. And these are things that we’re actually gonna get done. And so that’s the key with this, right? It’s like focusing on the top 20%, but things that we’re actually going to deploy or that we’re actually gonna accomplish. And so, you know, what we do too is we meet every week and everybody goes through, okay, look, here’s my progress. We bring up any concerns. So, hey, look, I ran into this issue. I’m trying to get it done by this date, but because this came up, I’m not sure if I can get it done. And for us, like not getting something done, it’s just, it’s not an option, right? Like everybody on my team knows that.

We have to come up with a solution to deliver. Sometimes it involves, you know, maybe taking that larger project and splitting it up out into a smaller project, but something always gets delivered. It’s just, it’s not an option to not deliver. And we treat the dev side the same way. So we break our dev sprints down into one week sprints and we either deliver or demo at the end of the week. And so there’s a book, a really good scrum book by Jeff Sutherland that I read, and we started implementing some of these processes, and it streamlined the development and execution processes dramatically.

So, let’s say you have a project and you realize that the scope is too broad, it’s not possible to deliver it, even if you’re 24-7 working on it, then what does it mean? Do you turn it into a demo? Is that okay? And how do you decide what to cut?

Yeah, so we try not to demo. We only demo when absolutely necessary. I want to launch things. I want to get stuff done. And so what happens a lot of times with companies or individual groups or web development agencies, they work on a project and the scope changes and then timelines change and then everybody thinks it’s okay to like not deliver on time. That I don’t wanna do that. And so we look at the project and we’re like, look, so this came up, we can’t deliver this entire thing. What can we get out by this Friday, for example? And so, the developer will come back and be like, okay, look, if we cut this out, we can get this out.

It’s part of the MVP anyway, and it will at least allow us to deliver, you know, a product that’s working. And then we can, next week, we can go add the second part to it. That’s what we always try to do. Every once in a while, they’re like large projects. So if there’s like a database project or load balancing or servers, or, you know, something a lot larger, you know, that, hey, you know, these 12 things need to happen over a 12 week period. Sometimes we can’t always, you know, deliver during that period. So we will for sure demo code or demo what was completed. But for larger initiatives, we always try to actually deliver something.

Well, that’s definitely, I mean, the demo is a good way to solve it. Because what I would be concerned about is if there is such a rock solid performance expectation, then would it not carry the risk of people sandbagging some of the sprints to make sure that they don’t paint themselves in a corner?

Yeah, so we use story points to analyze things. And the thing is, we want a realistic workload. I’m not trying to have developers work 70 hour work weeks. That’s not what I’m trying to do. But I do expect people to work full time and I do expect people to execute because that’s what I want to do. And so what we do is we have our director of engineering help with estimation of tickets and help break down projects. And then our, so we have him and our team leads, they create story points for all the projects that we have, the tickets projects. And so the developer will come in and add the estimate.

We have the story points, which is basically just saying, hey, look, here’s how difficult this project is. And then we can go back and make adjustments. Also with the developers, our team leads meet with the developers every day. And so our team leads manage a set of developers. They do dev work themselves, but they have meetings and they’re like, hey, look, what are you gonna do between now and tomorrow, right? So it’s a very quick meeting. It’s like, hey, look, here’s what I did from yesterday to today, you know, since we talked, and here’s what I’m gonna do by tomorrow, and here’s what I’m gonna complete this week.

And so, like, I’m big on not micromanaging, but setting up ways where we have a lot of accountability just built in, just baked into what we do. And so, you know, if we’re having those meetings and people are committing to doing those things, for sure, we get off, for sure stuff happens. If you’re sick, if you’re out, we figure it out. But if it’s a top 20%, we all collaborate as a team to how to keep that project moving. And so here’s an example. We have a few top 20% projects that we’ve been working on. One of our lead designers, his father passed away this past week.

We said, look, take all the time you need, just give us an estimation of when you can come back. And so he needed a week to be out of work for a week. And so we went to a few people within the team that had done some designs. We’re like, hey, look, we’re gonna have to borrow you this week to just finish these basic designs so that we can keep this project going. We have a third party designer that we outsource work to every once of all. We pinged him and said, hey, look, we’re going to have to tap you in this week and get some help to do this. And so we kept the project moving. Was it perfect? No, but we kept it moving and we were able to deliver this week on that project. So

Awesome.

Yeah.

All right. So, let’s switch gears. I’d like to learn a little bit about your offering. You say you are protecting people online. And I’m wondering what are the limits of being protected online? Is perfect protection possible? Probably not. And how should one think about their online presence in terms of being safe?

I mean, so we internally, we talk about protection as like, there’s reactive and proactive protection, right? So, you know, we hope that people use proactive protection and they monitor their information, they understand, they do education, like some quick education about like apps and websites they’re using to understand those things. And then there’s the reactive side where it’s like, hey, you get a weird phone call, or you’re in a situation where you have to make a decision and you react and you try to, you know, do your due diligence that way. And so, we try to focus our product on those two things.

So we have a tool called Privacy Lock, which is more of like a proactive type solution that lets you know where your information is out there, why it’s out there, we notify you as it comes up, we even have a scoring system. So you can kind of think of it as like your credit report, but for your social media. And so, you know, our next iteration that’s coming out shortly is gonna allow you to change different settings on it based on what your priorities are, your privacy priorities are. So, hey, look, I don’t care if anything’s out there, I just wanna know where it’s at. That would be one setting.

Next setting would be like, oh, I don’t care that my social media is out there, but I don’t want any personal information like my phone number or my email or my address, right? So that would be another setting. Another setting would be, I don’t want anything out there, right? And so, you know, people will be able to make settings and be able to monitor them over time. We’ll make recommendations how to do that. The second part is, you know, the more reactive type stuff. And so, you know, we essentially, we’re a people search company. So we help people, you know, find and verify people online, you know, using public data. And so there’s a balance there where, you know, we’re using public data, but we’re also helping people protect themselves against use of public data.

And so all the data we get is publicly available information. So we just make the assumption that if it’s publicly, if accounts have been made publicly available through our third parties that we purchase our data through, that that information is available. We have probably the most advanced opt-out process in the industry. And so we use a lot of algorithms and different things to reduce the opt-out process for most people. And then part of our privacy lock is to allow people to control their data without, like where they can hide it, you know, so even get access to it, but still hide their data. And then we’re building a lot of algorithms within the search. And so what we realized over the years is that like most people don’t understand how to look things up.

And so if you were to go and get a weird phone number from somebody you don’t recognize, maybe you look up that phone number, but there may be some other things that you could look up to determine, oh, who is this person? You’d be surprised the amount of money that people are scammed about it every year. It’s over a billion dollars that people lose every year to scams. And so we do an annual state of scams we literally just launched like two weeks ago. And so this state of scams gets picked up by pretty much every large media outlet across the country, even the world. And so we’ve been in CNN, NBC, CBS, ABC, you know, the Guardian, I mean, pretty much every publication around the world for a lot of the work that we do around, you know, like uncovering these scams and then publishing stats and trends. And so as part of that, we try to understand like where things are headed.

And then we try to be proactive with the tools that we’re building. Something that we haven’t done a lot of yet. So we definitely do a lot of education through social media and then through our website, but we wanna build like courses. We’re starting to realize that it’s so important that most people that fall for scams, a lot of it just comes back to education. So we’re looking to do more education to like schools. So, you know, here in the United States, we have the DARE program, you know, where people learn about, you know, drugs.

And, but, you know, people, you know, people go to school and you learn about math and science, you learn about drugs and you even learn about sex in school, but you don’t learn about online safety. And, you know, one thing over the last two years, we’ve been doing our SEDA scams, you know, ages 20 years and younger is the fastest growing segment. It’s grown 1100% over the last three years. And a lot of it is because people are overconfident with their abilities. And so we want to do a lot more education there. And so those are three different tiers we look at for, you know, online safety and the things we’re trying to tackle.

It’s definitely it’s a really good job working on that because, you know, we are at risk. I mean, my mother-in-law got attacked on Facebook last week. She was very upset for days. It emotionally impacted her. You know, we’re always concerned about our kids, what they get exposed to. So it’s great that companies like you work on this. This is very, very useful. Now, before we wrap up, I’d like to ask you about how you build this company and finance it. that specifically you made a comment earlier that you bootstrapped Social Catfish with $65. So I was wondering why you did that, you know, how can you even compete with other companies that are venture capital funded and they have, you know, voids of money that they can spend on running and becoming the biggest one in the market, why you decided to bootstrap and how you can keep up with your competitors in a very competitive market?

The interesting about online is it’s really not very different from, you know, like a retail setup, you know? And what I mean by that is like, if you have three department stores right next to each other on the same street, something has to be different between those department stores for them to succeed or else it comes down to price or customer service, right? And so if you don’t differentiate yourself from your competitors, it’s gonna be very difficult and you’re gonna have to have a lot of money to compete. You know, we’re luckily in a position now where we have a lot more money and we can do a lot of things that we couldn’t do eight years ago, you know, when we first started. But one of the things that we first got into, you know, when we first started doing this, we focused on like the catfishing and online scavenger.

And so we realized there were a bunch of competitors in our space, they were focused on, hey, look up your neighbors, look up your cheating spouse, look up this, look up that. And we focus on, hey, protect yourselves using this data. Look up the people you’re talking to, more specific use cases, instead of these like much broader use cases. And also they were use cases that make me feel better about like what we do as a company, instead of focusing on say like the cheating stuff, which we actually don’t get, we actually just try to deter people from trying to use it for that.

And so early on, we started, we created a lot of content around that, and because my background is in SEO, and so, you know, we started ranking for a lot of these terms that now drive, you know, they drive a ton of traffic that our competitors weren’t really paying attention to. And so when it comes to catfishing and finding people online, you know, that are being catfish romance scams, like if you look, if you run any of those searches, I mean, we’re always up there at the top and we’re known for that. And so we really built this brand around that. And then now as we’ve grown as a business, we’ve been able to slowly continue to grow the business and go outside that super niche vertical and go after a lot of their business that they’re getting right now.

You know, we’re still keeping our same ethics. We’re staying away from like the cheating and some other stuff that some of these companies go after, but we’re able to grow the business and start moving out now that we’ve created a profitable, sustainable business. And so we’ve never had debt. We’ve always had plenty of money in the bank. And one thing that COVID has taught me is like I’ve seen a lot of my friends’ businesses or people I know that have either struggled or gone out of business during COVID and we thrived.

And so one of the things I noticed, the people that had a lot of debt or the people that were living, like running businesses, essentially living paycheck to paycheck or they’re hemorrhaging money, those are the ones that struggled the most. And so, even before COVID, that was our approach. And when COVID is going on, that’s one of the biggest things I learned from this.

One of the things I noticed, the people that had a lot of debt or the people that were running businesses essentially living paycheck to paycheck or they're hemorrhaging money, those are the ones that struggled the most. Click To Tweet

So, basically what you’re saying is that because you started in a small niche, you didn’t need a lot of money to be in this niche. You had to figure out how to actually talk to the customers. And because you built a really robust cash positive business, then now you can expand leveraging that to the degree that you can actually expand effectively, profitably. And it’s not a question of funding, it’s a question of gaining market share by controlling the keywords, I guess.

Yeah, absolutely. You know, there’s some luck built in because you don’t always know what that niche is gonna be. But I mean, there’s a lot of data out there right now. And so if you do a competitive analysis on certain competitors in the industry, you’ll start to see those gaps. And so areas that they don’t focus on enough, which are big enough gaps to build a real business out of, but maybe things that they’re not fully paying attention to. And I guarantee you’re gonna come across industries and markets that you’ll find those gaps.

And if you can really capitalize on them, it allows you to bootstrap. And so, we have venture capitalists, we have people trying to give us money all the time. And I tell them, you know, we have a decent amount of money to the point where I’m, you know, a challenge of mine is trying to figure out where to use it effectively. And so for me to take on additional funding doesn’t make very much sense because I’m still trying to figure out how to spend the money we have in the bank.

That’s a great tactic. And obviously when you, it’s kind of also a forcing function when you don’t have too much money to spend, you will think twice what to invest in it and you will make better decisions. And the necessity is the mother of invention kind of thing. It’s awesome. So very interesting company, Social Catfish, you are growing, you’re very profitable, you’re expanding. You are also paying attention to being ethical, which is really cool. So if someone would like to use your services and find out about Social Catfish, where should they go? How can they connect with you? What should they do?

When you don't have too much money to spend, you will think twice what to invest in it and you will make better decisions. Necessity is the mother of invention. Click To Tweet

Yeah, so socialcatfish.com is a great resource. We have a lot of free information. We have thousands of articles we put on that give you information about doing this stuff. You can also sign up for a trial, less than six bucks. You can test out the service and see how you like it before you become a subscriber. If you wanna check me out, hesdave, H-E-S-D-A-V-E on pretty much every social media handle, Twitter, Facebook, Instagram. I’m not a big LinkedIn guy, because I’m not looking for a job, but I’m usually on the other ones, so.

Okay, fair enough. You’re on LinkedIn as well. I found you on LinkedIn, but I hear you, I hear you. Yeah. All right, David, well, thank you for coming. Super exciting conversation. And those of you listening, stay tuned. I will have another fantastic entrepreneur coming on the show next week. Thank you, David.

All right, thanks, Steve.

 

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