176: Apply Radical Transparency with Daniel Todd

19
Sep

Daniel Todd is the CEO and Founder of Influence Mobile, a company that builds products that reward people for everyday activities. We discuss ways to apply radical transparency to your business, how to become more industrious as an entrepreneur, and the benefits of being more transparent with your team.

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Apply Radical Transparency with Daniel Todd

Our guest is Daniel Todd, CEO and founder of Influence Mobile, a company that builds products that reward people for everyday activities. Daniel, welcome to the show.

Thanks, Steve. I’m looking forward to our conversation.

Ok, so we always start with the journey, the entrepreneurial journey. So how did you go from financial straights to building a very successful business with millions of recurring, monthly recurring revenue? Can you tell us your journey in a few sentences?

So it really started back in my late 20s. I started a company, went through a lot of ups and downs. And then from a business perspective, knew that I could take what we had learned, both the good and the bad side, both business-wise and kind of leadership-wise, and turn it into a new company. So about 12 years ago, I started Influence Mobile. We had lots of different iterations, but the whole goal was to use technology to influence people’s future shopping experience. So, and that from my perspective for the last 25 years is primarily females over the age of 35. They have the largest share of wallet. So I’ve constantly focused on technology to that they would be interested in and that would be compelling to them. So, but that did not always go very well. So, for the first 5 years, we were doing shopping rewards. And then about 2014, 2015, we had a partnership with Lindsay Lohan, who posted about the shopping rewards program. And thousands of people in a few minutes came on their mobile phones, and it became kind of this transformative moment.

We tried to shift into what was at the time mobile shopping, but everybody was kind of still doing that on Amazon. And so we partnered with Facebook and launched an app that rewarded people to try new things. And out of the gates, it looked pretty awesome. We started making millions of dollars a month very quickly with Facebook, but it also became clear that they had their own plans as they should around what data they wanted to share. And so we started building this product called Engage, which today makes $70 million, but on the day we launched it, it didn’t make anything, right? And we lost the partnership with Facebook. And so, we went through a very dark time where we had to lay off half the company, we were not profitable, and we were able to turn it around, thankfully, but only because we had this vision of like, “How do we build technology that influences females? We started talking to those people, launched an app called Eventually Rewarded Play that lets people earn rewards for playing and discovering new games and primarily spending money in those games. And over the last three years, despite the ups and downs, that has turned into one of the best decisions we’ve ever made. We’re recognized as one of the best in the world. And most, you know, our clients are the largest game developers in the world. Most of them pay us millions of dollars a year to finally engage this audience. And so it’s nice to see all that kind of clicking.

So, what lit the switch when you were in your darkest moment where you thought you might not make it? What was the tipping point? Do you remember that?

I think it was probably two. Well, yeah, there’s at least two. So one was we had this early partnership with, after Facebook, we had a partnership with this company that ended up not being very good, but it forced me and my co-founder at the time to sit down and start really building the infrastructure of Engage, this product that makes money today. And so like that came out of this not good outcome. And then because we did that, it gave me the optimism to go and talk with app developers who weren’t comfortable. At the time, there was this thing called incentivized advertising where people were trying to game the Apple Play Store system. And so people quickly wanted to put us in that bucket, but we were very different. And so it took a lot of selling, but I actually went to a conference and met this guy who I won’t name, who was awesome. He works at a very large games company and he gave me the time of day and he really listened to what we were doing and he made the introduction to their VP of marketing and they gave us the time of day and gave us a small budget. And over the next six months, they went from spending $5,000 a month to hundreds of thousands of dollars a month. And they eventually started pre-paying us and seeing the success of the product work for them gave me the confidence that it could work for anybody, and then we started growing from there.

That is very interesting. So it was basically one conversation, you went to a conference, it was the right kind of conversation, and someone really understood what you could do and believed in it and then embraced it and helped sell it. And then you could really show, demonstrate what was happening and that gave you the firepower to then expand from there. So, you know, there’s the saying that before daybreak is the darkest moment or something like that. It’s the darkest, it’s just before daybreak kind of thing. And you know, to have the perseverance to still believe and go at it and be in the game to get that magic moment happen. That’s fantastic. So, let’s switch gears here and let’s talk about your framework. And every episode, we have a framework, and we talk about it in the pre-interview. And what really struck me was that you have a framework around building culture, which is so powerful, and you call it the transparency framework, or at least you call it that.

Right.

Can you explain to our audience what it means and how it works and how it helps you strengthen your culture?

Yeah. It’s been fun, actually, Steve, thinking about this in more detail, right? Because before you and I talked, I never really called it a framework in my head, but as I started preparing for our conversation, a framework quickly evolved, right? Aspects of this started to quickly evolve. And so I think the number one framework for transparency for me is that I think it’s very important to treat others. I know this sounds very like kindergarten like, but treat others the way you want to be treated, right?

Treat others the way you want to be treated Click To Tweet

And so, but it’s sophisticated in the sense that like, it’s a very clear guiding principle, like, what I want somebody hiding information from me that, that if I knew I would take a different action right so like, why don’t you know like, it’s not transparent you’re getting a raise, like these things are not what transparency is for. You want, everybody obviously tells the good news. So transparency by definition, if you really are transparent, you have to be sharing at least questionable, if not just flat out dangerous, scary news, right? Which in startups comes all the time. So from a framework perspective, I started thinking, well, what is a framework for that? And I realized that I had written an article about hope and optimism, and that hope and optimism is actually the beginning of the framework for transparency. Because if you don’t have hope that you actually have a plan, you are definitely not going to be comfortable sharing it. Right?

So the very first step to me is you have to have optimism. You have to believe that you have a plan. And in this story I was just telling you where I met this guy, I had a plan. Like I knew what I needed. I asked them to put their faith in me and let us test. And they did, right? And so then along the way, right, we had the story going on to my employees and investors, right, saying like, “Hey, you know, at that time we were millions of dollars in debt, but I saw this thing working” and we had a client who was letting us test and I saw those. And so, on top of optimism right so so I was optimistic, right, on top of optimistic, which comes with I would say, a positive mood right because if you’re a leader and you’re in tough times, and you’re grouchy all the time and you’re mad at everybody. So on top of that, you kind of have to have what I would consider to be a positive outlook, a glass half full kind of operation. And when you have that, I think it gets the people around you more confident. Now they’re still all making their own individual choices of risk versus reward, right? Employees are like, well, you know, we have, there were times that we had two months of cash in the bank and I told employees, we had two months of cash in the bank, but I told them what we were doing, the milestones we had to hit to either get more cash from an investor. And at the same time, I’m talking to the investors saying like, “What milestones do I need to hit to have you feel more confident?” I thankfully have investors who stood by me through this entire time, but they didn’t do it because I disappeared and didn’t tell them things, right? So like I had to tell them the good and the bad. And in fact, many of them will credit me now for telling them the bad news because they, it builds their confidence that there’s not some other hidden negative that I’m holding back. So, so point one of the framework, I would say is optimism, surrounded with a positive attitude.

You have to have optimism. You have to believe that you have a plan. Click To Tweet

Number two, I would say, and I found this great quote, I have heard it many times and I won’t read the whole thing, but it’s from Teddy Roosevelt. And it talks about, it’s not the critic who counts, not the man who points out the strong man who stumbles or the doer of the deeds. And there’s a big long quote, maybe you can show it, but it’s who’s in the arena, right? And so I think when there’s a certain degree of risk in everything you do in a startup. And if you fear failure so much that you’re not willing to share the risk with other people, you actually increase your odds of failure, right? And so in this world, in this particular aspect, it’s not optimism, but it’s actually transparency with those who can help you. So I would call this mentorship, right? So it was very important to me. I believe that almost every business has some very core fundamentals and many people have gone through what you’ve gone through in the past. And so when it was the darkest hour, I didn’t kind of hide from people. I asked people for help, right? And I think it can feel like it’s catch 22, especially if you don’t have optimism, but if you have optimism and you’re explaining the plan, only two things are gonna happen. Maybe, maybe there’s more, but two things are gonna happen. People are gonna be like, “Hey, that’s a pretty good plan, I believe in it.” Or they’re gonna say like, “That’s a horrible plan, you should adjust it.” And like both of those pieces of feedback are valuable to you, right? If you talk to 10 different people who are all experienced entrepreneurs and have a great board, great investors, they all gave me different perspectives. Some were supportive, some were challenging, some were like, I don’t even know what value that you are creating for the clients. Other people are like, I see what you’re doing here. And so, but being willing to put yourself out there is another, again, not with your employees, but actually with a mentor, into the mentor community, the people that you surround yourself and get that feedback is very critical because then it helps you shape and hone in your strategy and gives you a better chance for success.

And if you fear failure so much that you're not willing to share the risk with other people, you actually increase your odds of failure. Click To Tweet

So actually this concept that you’re describing is, how Churchill in some ways beat Hitler in the Second World War because he went in front of cameras and he said that all I can promise you is blood, sweat, toil, and tears, not in that order. And basically, it touched people because there is a leader who actually has an optimism because that’s why they’re here. That’s why Churchill took the prime ministership because he believed he could change things. But he does it as it is, and he doesn’t sugarcoat this thing. And now we have someone that is credible, and then we can follow them. We didn’t think in the first place that it was going to be easy, but now someone is actually facing the facts and acting accordingly. That builds a lot of confidence in people.

Yeah. And like I said, when you start a startup, as you know, you start from ground zero. So technically, I had more ammo, right? I had some success. Yes, there were all kinds of failures and we were underwater from a financial perspective, but you start out with zero money, right? So you’re telling a story to gain people’s confidence, right? And investors, like I said, investors are taking risks and investors decide how much risk they want to take based on, like you said, the leadership. And so that part was very fundamental, but I also wanna point out, you can’t always take everybody’s advice, right? So in one of the darkest moments, it was May of 2018, we had just parted ways with my co-founder, we were out of money, I hadn’t taken pay for two years, and a buddy of mine, I was on his board and I called him up to ask about referring me to some developers in India because I needed to save some money. And he’s like, “Oh, by the way, I’m selling my company on Thursday.” And I’m like, “What?” And the way that mattered to me was I was a shareholder. And so literally the next week, I had gotten more money than I had had in, you know, not retired money, but like six, just over six figures, enough money to like take care of myself. And so in transition out of the company and my wife and my close friend and investor was like, “Maybe you should just shut things down,” right? But I still had that hope. I actually still, even though we were still underwater and my choice was either take a significant chunk of this money and put it back into the business or walk away, I chose against the advice of others, right? Because again, I had more detail, I had more confidence in what I was doing. And so, even though you want to be informed by all of these things, you ultimately have to make the decision according to your gut, your experience. Nobody else has got the same level of experience. So, inform yourself as much as you can, and then make the decision that you’re willing to stand behind.

Getting feedback is very critical because then it helps you shape and hone in your strategy and gives you a better chance for success. Click To Tweet

Okay, so having the hope and optimism is number one, step number one. Step number two, asking for help, feedback from mentors or people around you that you respect. And number three is, what’s number three?

So, the concept I would say is there’s something that’s called learned helplessness versus learned industriousness. I don’t know if you’re familiar with these terms. And for me, I don’t know, it kind of comes in this concept of grit and tenacity and resilience and all these different things, but I felt like I could make the change that was needed to. So you have to have a certain amount of learned industriousness, right? So, and you don’t want to be, you don’t want to be making these decisions of, you know, multi-million dollar game changing decisions with companies as your first big decision, right? So to me, learned industriousness is you’ve got to start early making decisions about how you make your world around you better. And so, you know, we talked about finding a mentor. I would say having patience is another huge element of transparency because you as a leader should realize that things are going to take longer than you want, almost always. In fact, I don’t think there’s ever been a time where things, any good thing happened way faster than I wanted it to happen, right?

It takes twice as long and cost twice as much.

Exactly. So you have to have patience. And so you should build that mindset into the beginning or you get frustrated, right? And so there was a time I mentioned that we were $3 million in debt and we owed a lot of it to Facebook. And they were very cool to deal with, but they wouldn’t write down $1. They’re like, “Listen, if you go out of business, you don’t have to pay anything back. But if you stay in business, you got to pay it all back, but you can set your time period,” right? And so I’m like, if I can set my time period, and I’m like, how long? He’s like, I don’t know, eight, 12 months. Well, I picked a time period of 24 months. So I was just like, Well, he said “I could pick it.” So I’m like, I put in and I could stack it however I wanted. So it was like $5,000 a month until like the very last month and I had to pay them like $450,000 in the last month. And I’m like, if I survive that long, I’ll deal with that problem then, right? And I just knew I’d set in a timeframe, like, okay, there’s a lot of work that has to go in there and you have to be patient to work your way through the whole process, but it gave me, so then I set that, which I guess, like I said, is an element of patience. And then I focused on the solution. I’m like, okay, great. Now I got out of that bucket, what do I need? And meanwhile, I mentioned I’d already had this other partner that was working along.

So I knew we needed to make some changes. At that time I had connected with a company that I ended up merging with called Blind Ferret Media. We acquired their team who had a lot of other relationships with app developers. And so I started coming up with solutions. So I’d say another element of the learned industriousness. So you’ve got, you know, find a mentor, have patience would be focused on solutions. And so in my mind, I started coming up with the steps that I felt needed to happen to get to either a profitability, which is the ultimate goal generally, or at least the stepping stones that would give my investors confidence to give me more money to get to the next milestone. So do that, and then you gotta, once you come up with your plan, then you’re back to transparency, you’re back to talking to everybody, telling people your plan, getting feedback from your employees, you’re building confidence with them because you’re sharing them.

And again, your plan is only as good as the feedback you get. And so if your employees don’t buy into it because they see some holes, you do need to know what those holes are, right? Cause you need to plug them or they’re gonna leave. So instead of hiding from feedback, you should really put your plan out there to get beat up as much as you can and get consensus as much as you can. So like, that’s why I view transparency as like the only way to fly because you need everybody on the same page you can’t do all this stuff alone. And then I guess the last subsection of kind of learned industriousness so I say is start early don’t don’t wait around, you can’t. Nothing’s going to be perfect right? you’ve got something that goes from point A to point B, get that working, get feedback on it, get the product out into people’s hands. Like if we had, like our product’s not even perfect today, and if we had waited for it to be perfect, we’d be out of business. And so you’ve got to get into the marketplace, get stuff out there, and then you’re, you know, it’s called effectively the Lean Startup Movement now, but we used to call it Hedgehog Mode, which was like get a little bit better than you were, but know that you can always kind of fall back into the safety net, but get going.

Yeah I find this very true, very resonant. And you know, what also allows you to build the confidence so you’re not hiding anything. Because hiding and trying to make things look better than they are, it’s just that it doesn’t just erode credibility, but it also is a major drain on energy. Because you’re essentially trying to paint this Potemkin village, and you know that it might crumble at any time and it keeps you from being able to focus on how to move the business forward. The other thing that strikes me is that when you maintain that veneer of okayness or normalcy, then you are really are, it’s like running with a lot more overhead than you can carry. So there’s no way you can work yourself out. But if you can shrink down to the reality of where you are, then you created some room for yourself to experiment, to go after things, to have more courage. I had an experience 15 years ago during the financial crisis. I was running an investment banking firm, and I suddenly, the conference in London, and it dawned on me that the financial system is collapsing. And I just finished reading the Great Depression, a book on the Great Depression.

If you can shrink down to the reality of where you are, then you created some room for yourself to experiment, to go after things, to have more courage. Click To Tweet

So I saw the very same patterns playing out. And when I got home from the trip, I went to my team and basically I made some really tough cuts. Essentially I halved my team. I let half the team go in two rounds in three days. But what they did was, first of all, people were, you know, this was a survival guilt around the office. So people felt really bad about the whole thing. But about a week later, they recovered, and suddenly we were the only firm that actually took the measures to protect ourselves, cut ourselves down to a sustainable size. So we actually had the future at the end of 2008. All we had to do is we had to generate $50,000 a month, which I know we could do with hustle, and just keep doing that. And people’s jobs were safe because we were making money, we were in cash-positive territory, and all our competitors, they were scared, they were expecting downsizing any day, and that really gave us a chance to gain market share over the time period. That’s great. So going back to this idea of transparency, so, okay, when you go through that really difficult time, then you have this opportunity to be transparent for better or worse. But what about normal times? Does that work in normal times as well? And what kinds of ways you can be transparent? What kind of things you can share with your team to build that trust through transparency?

I think one of the things, so last year we were a startup. I’ve made it pretty clear to the employees that have been around that our plan is not to run, I’m not gonna hand this down to my kids. My son’s a firefighter, he does not wanna be a tech leader. So, and I got investors who want their investment back. So the plan was always to sell the company at some point in time, right? So, you know, I’ve been doing this for 12 years. The company that we acquired in Canada called Blind Ferret, their leaders had been doing it for 15 years. And so last year we hired a great set of bankers to start taking us out to the market. Now it turned out to not be a very good time to go out to market, but part of what we were doing wasn’t just sell the company, but to understand the valuation methodology that was gonna be used. And ultimately became clear that we’re gonna be valued based on EBITDA, right? Like we have a, we’re not a SaaS based company that gets multiples of revenue, like we’re a transaction based company. So, but it really, certain people were very, thought it very odd that I would share that we were selling the company, right? Because they viewed that as, and everybody’s had different experiences where they’ve heard horror stories of companies that sell and people lose their jobs and obviously all these different things. And so that was reasonable, but they didn’t understand why I was sharing that. I’m like, well, first off, we’re selling in a positive scenario. Like we’re not gonna sell and certainly set ourselves up where, you know, like we’re firing half of our employees.

Like there are certain jobs when you merge companies that are more at risk, but the people that are in those jobs know that I care about them, but we’d never do something purposefully to hurt them. Like we would take care of them. And so throughout that whole process, I was transparent and it became less weird and weird and less of a problem for people. And then this year,we decided that we’d actually roll out a big bonus program tied to EBITDA because now we know, hey, so last year we decided to not sell because we understood that we could hit a certain EBITDA number and possibly quadruple our company’s value. In the next couple of years we had confidence in that growth. So now we rolled out this other program. And again, I went back to telling everybody we’re doing this because the plan is to sell. And then it brought up a whole not, a whole nother more set of questions. But now I feel like everybody in the company knows what we’re doing. They understand why we focus on specific priorities over other priorities. Like there’s obviously certain things that we have to always do to keep the lights on, but we’re trying to grow even a number and go sell and now everybody actually has they’re called “coins,” but I’ve given them coins that are kind of like a stock option that when we hit this specific EBITDA goal, everybody gets a bonus. So now everybody can focus on it, everybody can celebrate it when we hit it. And so that’s not transparency that I necessarily hear about in other companies, you know, when you focus on EBITDA.

That’s great, because again, you are removing a fear that people maybe have in the back of their minds, because they might find out about the sale anyway, even if you don’t tell them, and then they say, “Oh, okay, so they are hiding it from us.” So probably because, and then the rumor starts and they’re going to make up these big conspiracy theories in their heads and you basically cut to the chase. And ultimately, this is a successful company. Whoever buys it doesn’t want to lose the people.

Right.

And probably they have the funds to invest in the future and they might have a bigger vision and all that stuff. So it can actually work out pretty good for you people.

Yeah. Or people think that I’m selling it because I wanna leave. I’m like, you know, most people I’ve talked to, they’re not anxious to just kick me right out the door. Right? So if I sell, it’s really from a, it’s a diversification of my own financial risk, not that I don’t love what I’m doing. And so, like you said, it brings up questions. You answer those questions and then people feel more comfortable about it, right? And then when you go through those things, it makes the next issue, right? So let’s say there was some other issue that could break 50-50 in your favor because you had a pattern of transparency. I’d like to believe people give you the benefit of the doubt, right? So that’s, and I think that’s probably the most powerful long-term benefit of transparency is the trust that is built up between you and others as you collectively overcome challenges, right? We all have challenges. There’s challenges in our business today, right? Like Apple and Google are major platforms and we rely on their rules and their infrastructure to exist. And they’re making changes. Like Apple no longer allows us to do what we do. Like you can’t reward people, discover new games. It’s completely monopolistic in my opinion, it benefits them.

Europe’s forcing them to change. But there was a day when I thought if that ever had happened, we’d be out of business, right? And so that didn’t happen. And now Google’s making some changes. They’re removing the Google advertising ID, which is a major factor in tracking installs, which is very important to us. And so there’s an element of risk to it, but there’s also a massive upside, which is like we have a rewards ecosystem already, so we ask people for tracking, so it’s actually easier for us to like overcome this hurdle. And in the end, we could end up becoming the most valuable source of users for all game developers. So again, turning a negative into a positive. And if I hadn’t been transparent with people all along, a lot more people could be like, “Well, it could also turn out really bad,” which is, you know, it’s true, I suppose. Like, we don’t know exactly what Google is going to do, but, you know, we’re a good partner of theirs. And so that kind of transparency makes me more comfortable that everybody is on board when they say they’re on board about overcoming future hurdles.

And, yes, and if people really understand what you have in mind, they can align themselves with you. If they don’t know, if they are just guessing or you pretend that you have something else, they’re gonna align with that something else, which is not what you want. Right. And that’s gonna create some kind of loss of energy in the company, lots of efficiency, lots of direction. And that would go against the business. So I love it, it’s great, it’s very idealistic, which is what I love about this. So if people would like to learn more about you, about your philosophies or about your company, Influence Mobile, where should they go and where can they find you?

Easiest place to find me is on LinkedIn. So, you know, I write for Inc Magazine and Entrepreneur and I try to keep, you know, a lot of these thoughts out there. I’m currently focusing a lot on remote work and how to make, you know, make companies successful in those, in this venue that I think is sticking around. So yeah, if people want to catch up with me, check out LinkedIn.

Awesome, well, definitely do it. Daniel has got lots of good ideas and some really great podcast appearances videos on his LinkedIn page that you can watch as well and learn more about his experiences. Thank you for coming to the show and sharing your framework of transparency. It’s very powerful and it really helps align everyone in your company behind the objective, your objectives and the company’s objectives and they can really be going in the same direction we do. That’s awesome.

Thank you, Steve.

Yeah. Have a great day and we’ll stay in touch.

 

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